Page last updated at 10:59 GMT, Monday, 6 October 2008 11:59 UK

No extra safety for German savers

Chancellor Merkel: Your deposits are safe


The German government will not pass new legislation to provide extra protection for savers, the BBC has learned.

Chancellor Angela Merkel's commitment was a political one that no German savers would lose any money, according to BBC business editor Robert Peston.

Her undertaking was similar to that offered by Chancellor of the Exchequer Alistair Darling.

There were fears at the weekend that if Germany offered 100% protection, the UK would have to follow suit.

Prime Minister Gordon Brown is planning to speak to Mrs Merkel later in the day.

At the weekend, she said, "We tell all savings account holders that your deposits are safe. The federal government assures it."

Germany's move is in contrast to Monday's announcement from Denmark that it will provide unlimited guarantees to savers. Sweden has also increased the amount of protection it offers.

Last week, there was indignation across Europe after the Irish government unilaterally decided to provide unlimited guarantees to deposits in its banks.

In the UK, the limit on the amount of deposits that are guaranteed should a UK bank go bust will go up from 35,000 to 50,000 from Tuesday.

European summit

On Saturday, leaders from Britain, Germany, Italy and France met in Paris to discuss taking joint action to help banks.

They decided against a pan-European bail-out fund, but did agree to work together to support financial institutions.

The government of Iceland has also been involved with measures to support its banking sector, saying its banks had agreed to sell some of their overseas assets. The government is also trying to persuade trade union pension funds to repatriate some of their funds too.

European stock markets have fallen sharply amid all the uncertainty, led by falling bank shares.

The FTSE 100 in London fell 5.4%, the Cac 40 in Paris was down 5.9% and the Dax in Frankfurt dropped 5.4%.






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