Germany drives ahead with "bad bank" plans

Germany drives ahead with "bad bank" plansBerlin - Germany stepped up its efforts Tuesday to create a so-called bad bank to help rid the nation's banks of troubled assets and rebuild confidence in the financial sector.

"We have taken a big step forward" said German Economics Minister Karl-Theodor zu Guttenberg, following a meeting with finance industry leaders chaired by Chancellor Angela Merkel.

Guttenberg expressed confidence the government would be able to finalize details of its proposals to allow the banks to remove so- called toxic assets from their balance sheets by July.

The German banking sector has been pressing the government for some time to deal with toxic assets, which are linked to the mortgage meltdown in the United States that helped trigger the global economic and financial crisis.

"We believe that it is finally underway," said German Banking Federation chief Andreas Schmitz before the meeting with Merkel. Germany's move to draw up plans to deal with toxic assets follows similar action in leading economies around the world.

But a German government spokesman again ruled out Monday the creation of new central government authority to handle the toxic assets and insisted that a more decentralized solution involving the financial institutions would have to be found.

Officials said further talks between the government and the finance sector are expected in the coming weeks before details of the bad bank plan are finally thrashed out.

In particular, difficult questions needed to be resolved, among them how to decide which assets qualify and how the assets should be valued, the government spokesman said.

Adding to Berlin's problems in finalizing its bad bank scheme, nations around the world have taken different approaches in dealing with toxic assets. (dpa)

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