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Germany to give $776 billion guarantee to all private banks

Source: PTI
October 06, 2008 17:01 IST
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The German government has decided to guarantee all private German bank accounts worth Euro 568 billion ($776 billion) to prevent panic withdrawal as fears over the worldwide financial crisis spread to Europe's largest economy, media reports say.

"We want to tell people that their savings are safe", the Financial Times quoted German Chancellor Angela Merkel saying at an unscheduled press conference.

The scheme would cover existing accounts and others that savers might open.

German government officials also said the country's commercial banks had agreed to inject an extra Euro 15 billion into Hypo Real Estate, the ailing German mortgage and public sector lender, raising the bail-out agreed last week to Euro 50 billion, the paper said.

Berlin's decision on savings would see the abolition of its protection scheme, which guarantees 90 per cent of all bank deposits but only up to Euro 20,000 per account, the United Kingdom daily reported.

The report further added that there was annoyance that Merkel had acted unilaterally only hours after attending an economic summit in Paris at which she agreed there should be greater cross-border co-ordination of measures.

Recently, the Danish government had guaranteed all bank deposits in the country, as part of a deal with banks to set up a $6.5 billion liquidation fund, the report said.

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