Germany drafts bank takeover law

[malaise]

http://news.bbc.co.uk/2/hi/business/7896476.stm
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The German cabinet has agreed on a draft law that will allow it to temporarily nationalise troubled banks.

The law would allow private sector banks to be nationalised through the seizure of their shares to support Germany's financial system.

The draft law, which still has to be approved by the German parliament, said nationalisation would be a last resort.

The law is seen paving the way for the government to take over stricken German property lender Hypo Real Estate.

The lender's situation remains shaky despite a total of 102bn euros ($128bn, £90bn) in guarantees it has received from the government and other banks since October.

Finance Minister Peer Steinbrueck said at a press conference that Hypo Real Estate was a "system relevant" bank, and the draft law was designed to help the government stabilise it.

He also said the government would exhaust all the other possible options before deciding on taking over Hypo Real Estate.

'Crisis situation'

If the nationalisation goes ahead, it would be the first takeover of a bank by the government since the reunification of the country.