Accountable banks
September 27, 2010
A call for greater accountability for the financial sector has been made from within Germany's ruling coalition after 25 million euros ($33.5 million) in bonuses were paid out to employees of the troubled Hypo Real Estate bank.
The parliamentary leader of the pro-business Free Democrat party (FDP), Birgit Homburger, told the German Tagesspiegel newspaper that "a new culture of responsibility must be created using new legal parameters."
"I cannot understand these bonuses," she said in the interview, which was also published on the FDP's website. "For me these events prove once again that we need a new culture of responsibility in the economy."
Earlier this month, the German government defended the bonus payouts to employees of Hypo Real Estate, which was taken into state ownership when it faced collapse during the financial crisis, as "not inappropriate." It said that the one-time payments were necessary to hold on to experienced managers, despite the bank having to rely on government bailouts.
'Culture of responsibility missing'
Homburger, on the other hand, said that a culture of responsibility present in other industries was missing in the capital-based enterprises and the financial sector - and that external action was necessary to prevent failure from being rewarded.
"All appeals in this direction have so far been without the desired effect, as the excesses of recent years have shown," said Homburger.
"For that reason I would like new rules. Those who take decisions must also be responsible for their consequences."
High-profile victim
Hypo Real Estate was Germany's highest-profile victim of the financial crisis and had to be nationalized in 2009. It initially received almost 8 billion euros in state funds and more than 100 billion euros in state guarantees.
The bank was the only German institution to fail EU-wide "stress tests" in July, which led to the government offering it a further 40 billion euros in guarantees.
On Friday, the European Union's competition commissioner Joaquin Almunia said he had "doubts" about the long-term viability of the bank, although the European Commission granted temporary approval for state support to continue.
Richard Connor (dpa/Reuters/AP/AFP)
Editor: Michael Lawton