The German cabinet have this morning approved the new Bank Restructuring Bill, designed to help shore up European financial services and provide a more diverse toolkit for successive governments to aid failing institutions.
The Bill primarily imposes a levy on banking institutions based in Germany, and requires a contribution from profitable banks to create an access fund for future crises, in an attempt to guard against the impact for the taxpayer of future banking disasters.
The total turnover of the banking fund, according to Germany’s finance ministry will top $1.5bn a year, and all banking outfits based in the country will be liable to pay their levy, variable depending on the kinds of investment strategies they pursue, as a post-profit (and therefore non-deductible) expense.
It is hoped, according to German officials, that the resources funded by the levy will help account for any future banking bailouts, as significant austerity measures are rolled out nationwide to recoup the costs of the recent banking crisis.
Aside from the levy implications for banks and for the government in creating a central ‘rescue’ pool, the Bill also makes it easier for banks to restructure their existing organizations, allowing riskier elements of their operations to be more readily segregated or even sold from more stable elements of banking as a means of helping quarantine successful, risk-averse operations from their riskier counterparts.
The bill is expected to be in force by the end of the year, and is required to pass through both chambers of the German parliament before being enacted into law.