Bankers' headache

A German association of private banks said on Wednesday the looming introduction of a financial transaction tax in at least 11 European nations, including Germany, might not do any good to domestic lenders.

"The tax would be a severe blow to Germany as a stock exchange location," said the head of the association, Michael Kemmer. He claimed that London would be the main beneficiary of such a tax as Britain had always opposed the measure and would definitely not join the enhanced cooperation initiative of 11 fellow EU countries. This, he said, would give the British stock exchange an unfair competitive advantage in the process.

Kemmer emphasized that in his view a transaction tax would only be meaningful if it were introduced globally or at least in the whole of the 27-member European Union.

Political backing

While private German banks took a highly critical stance on the tax that might come as soon as next year, Germany's opposition Social Democrats welcomed the announcement of 11 European countries on Tuesday to apply for the introduction of the levy.

"It's paid off to increase the political pressure," Social Democrat (SPD) Chief Sigmar Gabriel said in a statement on Wednesday. "The transaction tax had cleared an important hurdle." Germany's SPD and other opposition parties had tied their approval of the EU's budget-consolidating Fiscal Compact to the government's resolve to help making such a financial transaction levy a reality.

It remains unclear for the time being whether the revenues from the tax would go the individual nations concerned or whether the windfall will be used for a currently debated joint-European budget, as supported in principle by Chancellor Angela Merkel and other leading European policymakers.

hg/rc (dpa, Reuters)