The federal cabinet on Wednesday brought a bill on this on the way. In the case of serious offenses, prison sentences of up to five years are envisaged. It is questionable, however, what will become of the plans. The states led by the SPD and the Greens could delay it in view of the new balance of power in the Bundesrat. Finance Minister Wolfgang Schauble (CDU), however, called on the opposition to cooperate.
Larger financial institutions must also prepare for a separation of the risky investment business from the traditional banking business. Customer business is to be shielded when risky transactions reach a certain level. According to Schauble, this would affect 10 to 12 banks. He did not name names. Another point in the legislative package: banks whose collapse could endanger the entire financial system are to draw up their own recovery and resolution plans ("bank wills") in the event of a crisis.
The government is thus drawing further consequences from the 2008/2009 financial crisis, in which banks in Germany also had to be rescued from bankruptcy. Savers’ deposits should be better protected and taxpayers saved from new billion-dollar burdens.
The draft law is based on proposals by a group of experts from the EU Commission. The consultations at EU level are still ongoing, so Germany is forging ahead. Schauble defended the action. EU deliberations could drag on for years. "That’s why we are speeding things up," he said. Germany is leading the way and wants to advance the process in the EU. If necessary, the national regulations would have to be adapted again at a later date. "We cannot put things off until the last day of the year."
The regulations are due to come into force in January 2014. Separation of business areas at the banks is planned by July 2015. The timetable is shaky, however: Due to the new balance of power in the Bundesrat, the states led by the SPD and the Greens could significantly delay the project.
Opposition politicians consider the plans insufficient. Green caucus leader Jurgen Trittin dismissed the law as a "placebo for election campaign purposes". No lessons would be learned from the financial crisis in this way.
Schauble nevertheless hopes to complete the parliamentary procedure by June. "I hope that the opposition will not be deterred from constructive cooperation by election dates this year either."CDU financial expert Klaus-Peter Flosbach warned: "If the Bundesrat prevents this law from coming into force, we will lose valuable time in regulating the financial markets."
Banking associations take a skeptical view of the plan: They warn of overregulation and a national go-it-alone approach. The Federal Association of German Banks spoke of an aberration. "The draft law weakens in many parts the German financial center and the proven German universal banking system," said President Andreas Schmitz. The Association of German Public Sector Banks called the package a "rush job at the expense of a high-performing banking industry and its customers".
The Federal Association of German Volksbanks and Raiffeisenbanks also criticized that the universal banking principle has a stabilizing effect due to its diversification of risks and earnings and should therefore not be abandoned. It also said that cooperative banks in Germany had given no cause for tightening supervisory law and even criminal law. "They have received no state aid, know no excessive bonus payments and are not involved in the recent scandals."