Banks should help fund stability measures -Buba

February 22, 2010

    VIENNA, Feb 22 (Reuters) – Banks should contribute toward financial stability measures, but a blanket levy on total assets could worsen future crises, the vice president of Germany’s Bundesbank was quoted as saying on Monday.
   Franz-Christoph Zeitler, whose tasks in Bundesbank’s board include banking supervision, told Austrian newspaper Kurier in an interview that any new banking tax to should be designed in a way that also improves financial stability.
   “The idea for a banking tax is based on the understandable wish to let banks contribute to the costs of the crisis,” Zeitler told Kurier, but added it was up to politicians to decide what form any bank contribution should take.
   “In my view there is much to be said for any contribution that directly supports financial stability and thereby also the future security of taxpayers and their funds,” he said.
   “This means stricter capital requirements or contributions to future financial stability measures,” he said.
   Talk of a bank tax to recoup some of the taxpayer money used to stabilise the financial system has swirled for months. Britain has set out a 50 percent levy on large bonuses at banks while Sweden is imposing a direct levy on bank loans to recoup roughly $10.6 billion for a financial crisis fund.
   Bundesbank President Axel Weber has said policymakers had to press ahead with regulatory reforms, which should be timely but not over-hasty and would provide an essential contribution to sustainable growth and financial stability.
   Zeitler said the problem with an Obama-style tax based on banks’ balance sheet total was that it would be due even if banks do not make a profit and may therefore make matters worse.
   “A banking tax based on the balance sheet structure would tax the substance … and would have the disadvantage that it would amplify the crisis in times of meagre earnings,” he said. (Reporting by Boris Groendahl; editing by Patrick Graham)
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Monday, 22 February 2010 09:06:11RTRS [nLDE61L0BO] {C}ENDS

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