CONTINUEThis site uses cookies. By continuing to browse this site you are agreeing to our use of cookies. Find out more.
  1. Front Page
  2. News By Topic
  3. German Banks Slam Bail-Out Tax Plans

German Banks Slam Bail-Out Tax Plans

by Ulrika Lomas,, Brussels

21 July 2011

The Association of German Banks (der Bundesverband deutscher Banken – BdB) has opposed plans by euro zone leaders to impose a tax on banks in a bid to support an ailing Greek economy.

A EUR1bn bank levy - positively received in general by the BdB - has already been agreed in Germany, designed to support banks in the event of a future financial crisis. However, the managing director of the German banking association Michael Kemmer, said that introducing a tax on the European financial sector, as part of a new bailout agreement for Greece, is a misguided proposal.

If politicians are considering a special tax or levy as a solution to the debt crisis, then it should be levied on all euro zone citizens, Kemmer insisted. The financial sector is merely in small part a creditor of Greece, he pointed out, while confirming that private banks are in agreement on the principle of contributing to an international aid plan for Greece.

Put forward recently by French European Affairs Minister Jean Leonetti, the idea of imposing a tax on the private sector as a solution to the Greek debt crisis has gathered pace among politicians. Expected to yield around EUR10bn, the proposal has, however, also been met with fierce criticism from the French Banking Federation (la Fédération bancaire française – FBF).

Determined to secure private sector involvement in any new rescue package for debt-ridden Greece, euro zone heads of state and government are said to be considering the idea of a financial levy to force private creditors to participate in the stabilization of the country alongside taxpayers. Leaders are also eager to avoid credit rating agencies from dealing their final and deadly blow by classifying Greece as insolvent, thus further escalating the crisis.

Although plans for a bank levy targeting the private sector have not as yet been conclusively agreed, it is understood that any such levy would be imposed on all financial institutions, irrespective of whether or not they have direct involvement in Greece.

Alongside plans for a bank levy, euro zone leaders are also said to be considering a further contribution to the second rescue package from the private sector, involving them in a bond buyback designed to enable Greece to reduce its deficit by around EUR20bn. While sceptical of such a move, the European Central Bank has already agreed to lend its support.

TAGS: tax | economics | banking | capital markets | Germany | Greece

To see today's news, click here.


Tax-News Reviews

Cyprus Review

A review and forecast of Cyprus's international business, legal and investment climate.

Visit Cyprus Review »

Malta Review

A review and forecast of Malta's international business, legal and investment climate.

Visit Malta Review »

Jersey Review

A review and forecast of Jersey's international business, legal and investment climate.

Visit Jersey Review »

Budget Review

A review of the latest budget news and government financial statements from around the world.

Visit Budget Review »

Stay Updated

Please enter your email address to join the mailing list. View previous newsletters.

By subscribing to our newsletter service, you agree to our Terms and Conditions and Privacy Policy.

To manage your mailing list preferences, please click here »