Taxpayers to foot huge ‘bad bank’ bill

Taxpayers to foot huge 'bad bank' bill
Photo: DPA
According to a new report published Saturday in news magazine Der Spiegel, experts at the German finance ministry calculate that tax-payers will have to shell out a further €120 billion to save Germany’s crisis-stricken banks.

Setting up so-called “bad banks,” receptacles for toxic assets weighing down troubled financial institutions hit hardest by the global finance crisis, could end costing Germany far more than previously thought, according to the report.

The €80 billion previously ear-marked to save the banks from their risky investments is apparently less than half what will be needed.

This new Finance Ministry assessment will now have to be analysed to see how it will work with the second stimulus package initiated by the government at the beginning of the year. “It is a massive spending programme, and we will have to analyse it carefully,” said one financial expert in Bonn.

According to Der Spiegel, officials are also concerned the new stimulus plan will do little to help the German economy. For example, the package reportedly contains development aid for the World Bank and measure more likely to help IT firms producing computers and other equipment in Asia.