Missing a great historical chance?
In a new round of negotiations on state support for German public-sector banks, the European Commission and the German government are urgently seeking a solution. But they are not the only participants in the dispute. The stakes are high for the municipalities and federal states which fear the demolition of the whole public-sector banking system. They are not ready to give in without a fight that might yet widen into a complex legal dispute requiring years to resolve. As the conflict intensifies, the public banks still have the chance to become strong, independent institutions.
A legal crisis is brewing in Europe over the status of German public-sector banks that, taken to its extreme, threatens the EU itself.
The European Commission (EC), urged on by private-sector banks, says guarantees for state-owned Landesbanken and municipality-owned Sparkassen are incompatible with EU law.