Fine distinctions, horrible outcomes
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Fine distinctions, horrible outcomes

The Sparkassen and Landesbanken voice their objections in the Koch-Weser group that is developing a German government proposal to the EC. But analysts would be surprised if the group produced an acceptable solution for the EC straight away.

Anstaltslast, translated as maintenance obligation by Moody's and institutional obligation by Fitch, means that the public sector sponsor (the Anstaltsträger) is obliged to supply the public law institution (the öffentlich-rechtliche Anstalt) it owns with the financial means the institution requires to be viable for the entire duration of its existence. This includes provision such that a public-law bank can pay its debts at all times. Under the Gewährträgerhaftung (guarantee obligation or guarantor liability) the guarantors have an unlimited joint and several liability to the creditors of the bank to meet any obligations it does not meet out of its own assets. With a Gewährträgerhaftung, but not with an Anstaltslast, the sponsors have a direct obligation to the creditors of the bank.

A report by Moody's therefore finds that: "Gewährträgerhaftung is broadly similar to an indemnity or deficiency guarantee, since the guarantee obligor is fully liable for the unmet obligations of the institution." As such, the Gewährträgerhaftung is significantly harder to defend. In November last year the Deutsche Sparkassen-und Giroverband (DSGV) indeed considered the possibility of fading out the Gewährträgerhaftung in an appropriate period of time.

But Karl-Heinz Boos, member of the executive board at the Association of German Private Banks, considers this to be a spurious suggestion.

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