Financial Market Stabilization Development Act
| Basic data | |
|---|---|
| Title: | Law on the further development of financial market stabilization |
| Type: | Federal law |
| Scope: | Federal Republic of Germany |
| Legal matter: | Administrative law |
| Issued on: | July 17, 2009 ( Federal Law Gazette I, p. 1980 ) |
| Entry into force on: | July 23, 2009 |
| Please note the note on the applicable legal version. | |
The law for the further development of financial market stabilization is an article law with which the Federal Republic of Germany enables the establishment of so-called bad banks to relieve the bank balance sheets of problem assets during the financial market crisis . Article 1 of the Act changes the Financial Market Stabilization Fund Act (FMStFG), the other articles change the associated Financial Market Stabilization Fund Ordinance and the Financial Market Stabilization Acceleration Act and regulate the entry into force.
Deutsche Bad Bank solution
The law offers different models for establishing a bad bank: the special purpose vehicle model and the consolidation model . The latter can also be specially designed by individual federal states through state law. What all models have in common is that each bank can set up a separate bad bank so that losses incurred at the end of the term can be allocated to the respective bank. In addition, it should be ensured that these losses are ultimately borne by the respective bank or its owner.
Special purpose vehicle
The special purpose vehicle model according to §§ 6a - 6d FMStFG is particularly geared towards private banks . You can outsource structured securities to a special purpose vehicle, for which the Financial Market Stabilization Fund then takes on guarantees with a term of up to 20 years for a fee under certain conditions . In the bank's balance sheet, the problematic securities no longer appear, but debt securities issued by the special purpose vehicle. If value adjustments have to be made to the securities, these should no longer burden the bank's equity , as the value of the special-purpose vehicle remains unchanged thanks to the state guarantee. This is to prevent the banks' ability to grant loans from being restricted by reducing their equity base.
In accordance with Section 6a (2) FMStFG, the prerequisite for assuming a guarantee is, in particular, that the structured securities are usually transferred with a discount on the book value . 90% of the book value of June 30, 2008 or March 31, 2009 or the actual value of the paper, depending on which of the three values is the highest, are to be applied. However, the book value of March 31, 2009 must not be exceeded. Banks with a very weak equity base may in some cases forego this discount. In addition, the transferring bank must have its registered office in Germany and accept the conditions for stabilization (in particular the salary capped at € 500,000).
Losses on the transferred securities are to be offset. On the one hand, the probable value of the paper at the due date must be determined on an ongoing basis . A compensation amount has to be paid for the difference to the value on which the transfer was based, which is, however, distributed proportionally over the term of the guarantee. The bank may not distribute any dividends to its shareholders as long as there is a deficit, i.e. the actual proceeds generated are below the transfer value minus the compensation amounts paid.
Liquidation Agency
The consolidation model or the settlement bank according to § 8a FMStFG is aimed at Landesbanken , but is in principle also open to private banks. At the Financial Market Stabilization Agency (FMSA), independent liquidation agencies (institution within the institution - AidA) can be set up - so meanwhile the FMS Wertmanagement AöR . Entire parts of the business of banks, from which the remaining core bank would like to free itself, can be transferred to this establishment. This must be approved by the FMSA in each case. The previous owners, in the case of Landesbanken usually the federal states and savings banks, are to be liable for the losses of the separated business areas.
According to § 8b FMStFG, states can set up similar institutions under state law.
Legislative process
The law was passed by the Bundestag on July 3, 2009. The Federal Council approved it on July 10, 2009. The law was issued by the Federal President on July 17, 2009 and announced in the Federal Law Gazette on July 22, 2009.
Individual evidence
- ↑ a b c Text of the law on the further development of financial market stabilization in the Federal Law Gazette ( Federal Law Gazette I, p. 1980 )
- ^ Resolution printed matter by the German Bundestag from July 3, 2009 (PDF file; 321 kB)
- ↑ Press release: Bad bank model decided ( Memento of the original from July 5, 2011 in the Internet Archive ) Info: The archive link was inserted automatically and has not yet been checked. Please check the original and archive link according to the instructions and then remove this notice. dated July 3, 2009
