Frankfurt, Berlin Federal Minister of Finance Christian Lindner sees the private banks in a key position in the fight against the looming economic crisis. The FDP boss hopes that the institutes will ensure the liquidity of the economy and enable investments despite all the turbulence. For this reason, the liberal has shown himself to be much friendlier to the industry, which has been politically controversial since the financial crisis, than some of his predecessors.
In Lindner’s opinion, the regulatory goals of consumer protection and financial market stability have often been in the foreground in recent years. The FDP politician wants to focus on something else that he believes has long been neglected: “strengthening the global competitiveness of the German financial center”.
Lindner, who was connected to the Handelsblatt banking summit this Thursday via video, is primarily counting on the completion of the capital market union in the EU. A common capital market in Europe with comparable rules “lowers the hurdles for cross-border business and thus creates new perspectives beyond the very narrow German banking market,” argues the Federal Minister of Finance. The capital markets union is the greatest political and regulatory lever to generate growth for the banks.
Lindner also sees progress in the banking union, but he again rejected one of the central pillars of the project: the creation of a Europe-wide common deposit insurance. “I am extremely cautious on this subject, I expressly emphasize more cautious than the German private commercial banks and their banking association.” According to the finance minister, the financial policy responsibility of the members of the monetary union must also include “their own private institutions”, everything else would be regulatory ” extremely questionable”.
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Lindner thus clearly took the side of the savings banks and Volksbanks, which reject the common European deposit insurance because they would question their own security systems. For Lindner, these security systems “represent an additional quality of Germany as a business location”. Lindner also wants to “make a strong case for proportionality in the EU. The intention behind this buzzword is not to regulate smaller institutes as strictly as the systemically important big banks.
No quick Commerzbank sale
But Lindner also has good news for Commerzbank, Germany’s second-largest private bank: the traffic light coalition is not aiming for a quick sale of the state’s stake in the institute. “The federal government is very satisfied with the development of Commerzbank,” emphasizes Lindner.
“We have no legal or other obligation to make quick decisions about Commerzbank, but we want this bank to develop well in the German financial center because we know its important role.” There is no reason for speculation about a sale of Commerzbank shares.
The state saved the major Frankfurt bank from collapsing in the 2008/2009 financial crisis with more than 18 billion euros in tax money. Commerzbank paid back the state aid years ago, but the federal government is still the largest single shareholder in the institute with a stake of 15.6 percent.
According to the previous federal government, the federal government would have to achieve around 26 euros per share in order to end the Commerzbank commitment without a loss. The share price is currently around seven euros.
Business support
Not only the banks, but also the companies, Lindner promises support in the current crisis. The traffic light coalition will help with the third relief package that has just been announced, but also with measures beyond that, the finance minister announced: “We will ensure that economic structural breaks and social hardship are cushioned.”
Specifically, he announces an “adjustment of direct economic aid for energy-intensive companies”. There is already a corresponding instrument, but the federal government wants to expand the support in view of the further aggravating energy circles.
Existing aid programs are to be extended, as the SPD, Greens and FDP announced in their third relief package. This also includes support from the state-owned KfW bank. There should also be improvements in the exemption from liability.
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During the bank summit, Lindner also spoke of “measures in insolvency law in the event of over-indebtedness”. The federal government wants to take precautions to prevent a possible wave of bankruptcies among companies. According to the Ministry of Justice, changes to the obligation to file for bankruptcy should give companies more time to adapt their business models.
The finance minister and head of the FDP is trying to spread confidence despite reports of increasing insolvencies. He does not want to confirm that he is said to have warned at the last coalition committee that “an avalanche” was approaching Germany. The term cannot be classified without the context of the negotiations. “I, for one, am not a Cassandra caller.”
Faster approvals
In addition to the concrete help from the relief package, the FDP leader also announced permanent structural improvements for the economy. So there should be an initiative in autumn to speed up planning and approval procedures. It is not just about the energy sector such as LNG terminals, but all companies.
Lindner renewed his demand for a temporary continued operation of the three nuclear power plants still on the grid. The Minister of Finance speaks of a “turning point in energy policy”, which not only necessitated changes to the rules of the energy market. It is also about “new sources of energy”.
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In addition to the construction of liquid gas terminals, “existing capacities must also be used as effectively as possible,” demands Lindner. “I’m not only thinking of the coal-fired power plants in Germany, but also specifically of the three safe and climate-neutral nuclear power plants.” Their continued operation would not only stabilize the power grids, but also “send a welcome price signal” through more supply, says Lindner.
The FDP leader is thus continuing to confront his coalition partner Robert Habeck from the Greens. The Federal Minister of Economics would like to shut down one nuclear power plant as planned and only use the others as an emergency reserve. Lindner still doesn’t want to know anything about a coalition crash. “I would speak of productive tension,” he says.
At the same time, Lindner defended his financial policy, which is currently being criticized primarily by the Greens. The finance minister wants to comply with the debt brake again next year. He also sees this as a contribution to combating inflation. “We have to get out of the expansive fiscal policy,” says Lindner.
That is also necessary because he now has to spend significantly more on debt service. In the coming year, Lindner is planning interest payments of almost 30 billion euros, compared to four billion euros last year.
More: Federal government is arming itself against company bankruptcies