Open

Coming up

Don't miss

Replay


LATEST SHOWS

MEDIAWATCH

'New York Post' slammed for publishing ISIS execution images

Read more

DEBATE

Back to Square One?

Read more

DEBATE

Israel-Gaza: Back to Square One?

Read more

DEBATE

Israel-Gaza conflict: 72-hour ceasefire deal sets stage for Cairo talks

Read more

WEB NEWS

Web users divided over Darren Wilson

Read more

FOCUS

Spain's El Hierro to become world's first self-powered island

Read more

IN THE PAPERS

A bellwether for what not to do

Read more

ENCORE!

Luc Besson back in action with Scarlett Johansson in 'Lucy'

Read more

FOCUS

Israel's minorities and military service

Read more

  • Interactive: Relive the Liberation of Paris in WWII

    Read more

  • Brutal IS beheading video sparks social media pushback

    Read more

  • French village rallies behind besieged elderly British couple

    Read more

  • Netanyahu compares Hamas to IS, Gaza offensive to continue

    Read more

  • France’s ex-PM Juppé sets up presidential clash with Sarkozy

    Read more

  • France’s Hollande says global security ‘worst since 2001’

    Read more

  • France urges Iran, others in region, to join fight against IS

    Read more

  • A new view on Normandy landings, 70 years on

    Read more

  • Video: Dozens arrested despite smaller protests in Ferguson

    Read more

  • Dozens killed as landslides strike Japan’s Hiroshima

    Read more

  • Suspected Ebola cases in Austria, new drug raises hopes

    Read more

  • WWII anniversary highlights best - and worst - of Paris police

    Read more

  • Headscarf at the beach sparks French MEP’s fury

    Read more

  • Video: Life in under-siege Donetsk

    Read more

  • Racism, riots and police violence: USA under scrutiny

    Read more

Merkel 'pulls out all the stops' to save Hypo bank

Latest update : 2008-10-05

German Chancellor Angela Merkel's says her government is "pulling out all the stops" to salvage a 35-billion-euro plan for troubled bank Hypo Real Estate, and in a move to build confidence, Germany has guaranteed private saving deposits.

Germany extended a guarantee to all private savings accounts Sunday as Chancellor Angela Merkel said her government was scrambling to salvage a rescue plan for the country's fourth biggest bank.
   
Finance ministry spokesman Torsten Albig told AFP that the unlimited guarantee would cover all Germans' personal deposits as Berlin moved to shore up confidence amid a spreading financial crisis.
   
Merkel told reporters earlier the government was "pulling out all the stops" to save stricken Hypo Real Estate (HRE) after a banking consortium withdrew from a 35-billion-euro (48-billion-dollar) rescue plan late Saturday.
   
"The government says today that we will not allow an institution's crisis to become a crisis for the entire system," the conservative leader said.
   
But hitting back at accusations that the government is preparing to bail out fat cats at average citizens' expense, Merkel warned that "those who did irresponsible business will be held accountable".
   
"We owe that to the taxpayers in Germany," she said.
   
Her remarks came after the leaders of France, Germany, Britain and Italy gathered in Paris Saturday to pledge a more coordinated approach to prevent the meltdown in US financial markets from engulfing their own economies.
   
While the four powers put on a united front, there was no talk of a joint bail-out fund for European banks on the model of the 700 billion dollar US package approved Friday, after the idea was shot down by London and Berlin.
   
The rescue bid for HRE was the largest in German history and came after the bank was sucked into the global financial turmoil by its inability to refinance debt, one of many high-profile European emergency cases in the past two weeks.
   
The deal was stitched together in haste at the end of September and its failure Saturday sent officials racing back to the drawing board.
   
Finance Minister Peer Steinbrueck said HRE had an "unforeseen liquidity gap in the billions" of euros range but also assured that the left-right government was determined to find a solution.
   
The Social Democrat said he was "quite appalled" that the bank's management had not revealed the extent of its liquidity crisis earlier.
   
But he said Berlin would nevertheless do what it could to avert its collapse "because the damage not only for the Federal Republic of Germany but also for many European financial services providers who are interlinked with us would be incalculably large."
   
Dropping its bombshell Saturday, HRE said in a statement that a consortium of German banks taking part in the rescue had "refused to provide liquidity lines."
   
The online service of Der Speigel news weekly reported that HRE would need 50 billion euros in liquidity by the end of this year with an additional 10 billion euros required in 2009.
   
Merkel and Steinbrueck made their joint statement as officials from the finance ministry, the financial market supervisory board and the Bundesbank huddled for crisis talks, sources said.
   
Senior staff from the three institutions aimed to determine the extent of HRE's needs and plot a way forward before markets reopen Monday.
   
Steinbrueck and representatives from private banks were expected to join the meeting later Sunday, the sources said.
   
In his remarks, the finance minister assured that German bank account holders need not worry about losing a "single euro" in the crisis.
   
"That is an important message intended to create calm and not reactions that would be disproportional and make the current crisis management and crisis prevention even more difficult," he said.
   
Despite the assurances, one German minister could not resist an alarmist take on the gathering storm in Europe's biggest economy.
   
Interior Minister Wolfgang Schaeuble warned in a magazine interview that the global financial crisis could have political repercussions, noting that Adolf Hitler rose to power following the 1929 Wall Street crash.
   
"We learned from the worldwide economic crisis of the 1920s (and 1930s) that an economic crisis can result in an incredible threat for all of society," he was quoted as saying in an advance copy of Der Spiegel's Monday edition.
   
"The consequences of that depression was Adolf Hitler and, indirectly, World War II and Auschwitz."

Date created : 2008-10-05

COMMENT(S)