Response to Greek crisis

Germany's major banks and insurance companies promised to contribute to the multi-billion euro rescue package for Greece on Tuesday, following a meeting with Finance Minister Wolfgang Schaeuble. But Heinrich Haasis president of German association of saving banks, claimed that the state-owned Sparkassen should not have to contribute to the plan, and called for stricter financial rules to regulate major bank's investments.

"We have received no calls for help," Haasis told the financial daily Handelsblatt on Tuesday. "Those that have helped Greece with creative accounting or unconventional borrowing arrangements are more responsible. The Sparkasse belongs to neither of those groups."

Not the first in line

Before Schaeuble's meeting with Germany's leading bank managers, Haasis said that the Sparkasse should not be forced to contribute to any bailout plan.

"The Sparkasse should not be the first in line to deal with the Greek bailout plan," Sparkasse spokesman Stefan Marotzke told Deutsche Welle. "But Haasis did not say that the Sparkasse would not contribute if asked. As he said, no demands have been made yet."

"Of course, individual institutions in our group do have some commitments in Greece," Marotzke added, and reiterated the point made by Haasis earlier: "No credit institute should be condemned for buying government securities from a eurozone state. That is a safe financing plan that the eurozone states encourage."

But Haasis insisted that an international transaction tax needed to be introduced to cover all financial institutions, including hedge funds, who have not been asked to contribute to the bailout package.

Germany's financial institutions intend to extend credit limits to the Greek government and banks by at least three years, it was announced. Deutsche Bank chief Josef Ackermann spoke of a "substantial contribution," but declined to give specific figures, saying these still needed to be calculated.

Savings bank warnings

Ackermann thanked the eurozone states for the speed with which they recently agreed the 110 billion-euro ($145 billion) bailout package, and said that the commitment from Germany's banks would send an important signal of support to the financial markets. "It is extremely important that we extinguish the fire that has started in this house," Ackermann said.

But Sparkasse president Haasis sounded some notes of warning, and called for stronger measures against major banks, despite broadly supporting the agreement. During the opening press conference of the Sparkasse Day in Stuttgart, Haasis said, "We have to soberly observe that the necessary consequences of the financial crisis have not yet been drawn, either in the financial branch or among politicians."

He was particularly critical of the influence of so-called "mega-banks." "Financial institutions that are constantly getting bigger, rather than smaller, present huge dangers to stability," he said.

Instead of strengthening regulations against savings banks and credit unions, Haasis demanded that the government force large banks to stake more of their own capital in investments. He said that taxpayers had to be better protected from the stability risks of large financial institutions.

Haasis also said that the number and size of the large banks needed to be reduced. "There is no right to mega-banks that threaten entire national economies," he said.

Author: Ben Knight
Editor: Rob Turner