Germany may revive the state fund to assist banks

27.01.2012 Recently the lower house of German parliament has approved the legislative project to revive the fund SoFFin for the "safety” of banks of the state from losses on sovereign European bonds. SoFFin was established in 2008 and acted in support of the German banks in crisis but as soon as it has reached the goal the project was frozen.

At the moment the fund will be able to provide banks with guarantees at around 400 bln. euro and provide 80 bln. euro to recapitalize these financial institutions.
The approved project will give banks the opportunity to sell any financial instruments to the fund. SoFFin will also receive sovereign bonds of euro zone participants from the banks.

Let’s recall that by 30 June 2012 the German banks are obliged to increase its capital by about 13.1 bln. euro. That's why the project to revive the fund SoFFin was developed.

Expert’s opinion

“An appeal to the project of the fund SoFFin support for the German banks – is an emergency measure, which Germany used in moments of crisis, as it was in 2008. Experts say that today the situation is quite different and the country's banks can overcome the negative effects on their own, increase its capital to the required size by June 2012.

However, if the project is started, the fund will be able to provide reliable support to financial institutions in Germany”.

On the basis: www.vedomosti.ru

Vorontsova Maria ( the lawyer of international consulting department of Honest&Bright)