Brussels, 15/01/2003 (Agence Europe) - The German authorities have met the demands of the European Commission to end guarantees to its public sector banks and savings banks in keeping with the time limit (end 2002) - pursuant to the agreements concluded in July 2001 and February 2002 (see EUROPE 2 March 2002 p 13). As a result, the "Gewährträgerhaftung" (e.g. the Federal Government, the Länder or the municipalities) is obliged to protect the economic basis of the institution and maintain its viability throughout its lifetime and the "Anstaltslast" (the obligation on the owner to maintain the institution concerned) by a "normal" relationship between the financial institution and its owner, which is no longer obliged to comply. Mr Monti, the Commissioner with special responsibility for competition welcomed the full co-operation of the Federal Government and the various federal authorities and Länder, which had significantly speeded up the adoption of the legislation and (provisional provisions are foreseen) opens the way for fair competition in the single market financial sector. Hitherto, the Landesbanken were allowed to expand their banking business at the expense of private competitors, since State guarantees reduced refinancing costs thus giving the banks greater business opportunities. Commissioner Monti explained that "The competitiveness of the German and the European economy will benefit from the abolition."
Mr Monti also warned that the Commission was going to follow with even more attention the transposition of the Commission's decisions into national law. Even if there is willingness among most Member States to transpose decisions properly, Mr Monti stated that "there are often technical mistakes in the transposal or differences of opinion on certain points. It is important to identify and correct such mistakes at an earlier stage."