(Adds detail, background)
BERLIN, July 3 (Reuters) - Germany's Bundestag lower house
of parliament approved a "bad bank" plan on Friday that aims to
relieve banks by enabling them to shift billions of euros in
troubled assets off their books.
The parliamentary parties in the ruling coalition earlier
this week agreed to sweeten the plan to encourage banks to tap
the measure and offload toxic assets that have hindered lending
activity and aggravated Germany's deepest post-war recession.
Finance Minister Peer Steinbrueck said German banks needed
to escape from a downward spiral of writedowns.
"With each of these steps downwards banks eat up more of
their capital resources and that is extremely dangerous," he
told the Bundestag.
"It is dangerous for two reasons: Either one day you have so
little capital that you face insolvency," he said, adding: "What
is a bigger problem is that this capital, which is being eaten
up as assets are devalued further, is no longer available for
what we urgently need in Germany: new business."
Under the German "bad bank" model, banks can place toxic
assets in special purpose vehicles (SPVs) -- or "bad banks" --
once a book value has been calculated by a third party.
A number of German banks, both stock-exchange listed and
public sector lenders, could benefit from the plan.
The country's second-biggest lender Commerzbank
has shifted some 38 billion euros ($53.27 billion) in risky
assets to an internal vehicle where a team of specialists will
work them out over the next several years.
Deutsche Postbank , in which Deutsche Bank
holds a stake of more than a quarter, has said the
bad bank could help in dealing with a 6 billion euro portfolio
of complex asset backed securities, part of which it has already
written down.
Nationalised property financier Hypo Real Estate ,
which has received 52 billion euros in government financial
guarantees, may offload its wayward state financing business to
the bad bank, industry experts say.
Regional public sector banks WestLB [WDLG.UL], LBBW
[LBBW.UL], HSH Nordbank [HSH.UL] and BayernLB [BAYLB.UL] are
also struggling to find a new home for their billions of euros
of bad assets.
SWEETER TERMS
Under the deal reached between the ruling coalition experts,
the cut-off point for valuation will now be June 30, 2008 and
not March 31, 2009 as previously intended.
Fixing the date before the collapse of Lehman Brothers in
September -- an event which greatly intensified the financial
crisis, causing major declines in the value of assets -- allows
lenders to put a higher value to troubled assets.
"No one can rule out that one way or another the banking
sector will have further problems in the coming months,"
Steinbrueck added.
The Bundesrat upper house of parliament is due to vote on
the measure in a week so that it can be approved before the
parliamentary summer recess.
Earlier, the BdB commercial banks' association welcomed the
coalition's agreement on the "bad bank" model.
"I regard it as important, so that we are armed for what
comes later this year and perhaps in 2010, because we still face
a way to go with this economic slump," BdB Managing Director
Manfred Weber told Deutschlandfunk radio.
The Bundestag also approved a law to clamp down on tax
evasion. The measure will make it mandatory for German citizens
and companies who do business or keep a bank account in tax
havens to inform the German authorities fully of this.
Steinbrueck has made it his mission to stamp out tax
evasion.
"Anyone who evades taxes, damages society and derides the
rule of law and makes the state weak at a time when the state
more than ever needs to be capable of acting," he told the
Bundestag.
(Reporting by Paul Carrel and Brian Rohan in Berlin and
Jonathan Gould in Frankfurt)
(For a factbox with details of the plan, please click on
[ID:nL171261])
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