Senior German lawmaker says no more aid for ailing banks

TECH POWERHOUSES: Germany

BERLIN: Germany will not grant any more state aid for ailing banks, a senior lawmaker in Chancellor Angela Merkel's conservative bloc said on Thursday, a day after the government denied it was working on a rescue plan for Deutsche Bank, its biggest lender.

Deutsche is disputing a fine of up to US$14 billion from the US Department of Justice. Concern about the bank's financial health sent its shares to a record low on Tuesday.

Referring to the state rescue of banks on the brink of collapse after the 2008 global financial crisis, Hans Michelbach, a financial expert in Bavaria's Christian Social Union (CSU), told Deutschlandfunk radio: "I cannot imagine that the state will repeat something like that." 

The German finance ministry on Wednesday brushed off a report that a rescue plan was being prepared in case Deutsche was unable to raise capital to pay legal bills.

Michelbach, and head of the conservatives in the parliamentary financial committee, also reiterated his criticism of the European Central Bank's low interest rates policy and bond buying programme after ECB president Mario Draghi came to Berlin to address a group of lawmakers.

Draghi meets Merkel later on Thursday.

"The policy has failed," Michelbach said, noting that Draghi had given no signal when and how the low interest rate policy would come to an end. 

He said cheap money was stopping countries from implementing reforms.

"We want, quite clearly, to end the low interest rate phase," he said. - Reuters