Germany to allow banks to offload problem units

[joeblow]

Germany to allow banks to offload problem units

http://www.guardian.co.uk/business/feedarticle/8541533


BERLIN, June 4 (Reuters) - Germany plans to give banks the opportunity to offload entire problematic business operations, a draft law obtained by Reuters on Thursday showed.
The plans, which Finance Minister Peer Steinbrueck is expected to present to cabinet next week, would create a federal institute for financial market stabilisation (FMSA) into which banks could offload non-strategic business operations.
The FMSA is aimed especially at Landesbanks, regionally based lenders which have been hit particularly hard by the financial crisis.
"A Landesbank should only be able to use the consolidation model if a state with a stake in the bank has committed to a restructuring of the Landesbank sector," the draft read.
The draft law would amend existing plans to introduce a "bad bank" model to relieve lenders of toxic assets. The government aims to pass the legislation before parliament recess in July.
Earlier on Thursday, Germany's states agreed to consolidate the regional Landesbank sector by the end of 2010. (Reporting by Matthias Sobolewski, writing by Paul Carrel; Editing by Hans Peters)