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Germany seeks to reassure savers Germany seeks to reassure savers
(30 minutes later)
German Chancellor Angela Merkel has moved to reassure savers in German financial institutions that their deposits are safe.German Chancellor Angela Merkel has moved to reassure savers in German financial institutions that their deposits are safe.
The move came as Germany's second biggest commercial property lender struggled to stay in business. The step came as one of Germany's biggest lenders, Hypo Real Estate, struggled to stay afloat.
However, BBC business editor Robert Peston says it is unclear whether this is a 100% government guarantee of all savings deposits. But BBC business editor Robert Peston says it is unclear if this is a 100% government guarantee of all savings deposits.
Ms Merkel also said she would pull out all the stops to save Hypo Real Estate.Ms Merkel also said she would pull out all the stops to save Hypo Real Estate.
The bank is in trouble after a 35bn euro ($48bn; £27bn) rescue plan collapsed.The bank is in trouble after a 35bn euro ($48bn; £27bn) rescue plan collapsed.
Hypo Real Estate has said it will study alternative measures to fund its business.Hypo Real Estate has said it will study alternative measures to fund its business.
European governments are as dazed and confused by the mayhem in the global banking system as most of the rest of us Robert PestonBBC business editor Peston's view: Lost in translationSend us your comments href="/1/hi/business/7652739.stm">No business rush to Irish banks European governments are as dazed and confused by the mayhem in the global banking system as most of the rest of us Robert PestonBBC business editor Peston's view: Lost in translationSend us your comments href="/1/hi/business/7653750.stm">Iceland shores up economy
The BBC business editor says the biggest worry is now in Iceland, where the government is trying to shore up the entire banking system before markets open on Monday.
Ms Merkel's comments came after Europe's major economies agreed to co-ordinate their response to the crisis.Ms Merkel's comments came after Europe's major economies agreed to co-ordinate their response to the crisis.
She was speaking after an emergency meeting with the central bank and financial regulator. She was speaking followed an emergency meeting with the central bank and financial regulator.
"We tell all savings account holders that your deposits are safe. The federal government assures it," Ms Merkel said."We tell all savings account holders that your deposits are safe. The federal government assures it," Ms Merkel said.
"We will not allow the distress of one financial institution to distress the entire system. For that reason, we are working hard to secure Hypo Real Estate.""We will not allow the distress of one financial institution to distress the entire system. For that reason, we are working hard to secure Hypo Real Estate."
Ms Merkel has previously been strongly critical of the Irish and Greek governments' decisions to take independent action to protect all savings deposits.Ms Merkel has previously been strongly critical of the Irish and Greek governments' decisions to take independent action to protect all savings deposits.
'Irresponsible' Our business editor says that if the German government is making a firm commitment to guarantee all deposits, the leaders of other EU states - including the UK - would have to follow suit.
'Appalled'
The problems of Hypo Real Estate will put further strain on other financial institutions, which are struggling against a crisis of confidence in the global financial system.The problems of Hypo Real Estate will put further strain on other financial institutions, which are struggling against a crisis of confidence in the global financial system.
Ms Merkel also said that managers at financial institutions should be held accountable for "irresponsible behaviour".Ms Merkel also said that managers at financial institutions should be held accountable for "irresponsible behaviour".
Finance Minister Peer Steinbrueck said he was "appalled" that the problems at Hypo had not been revealed earlier. Hypo's problems should have been revealed earlier, a minister says Finance Minister Peer Steinbrueck said he was "appalled" that the problems at Hypo had not been revealed earlier.
Hypo's problems should have been revealed earlier, a minister says Hypo Real Estate relies heavily on borrowing from other banks to fund its business and has suffered badly as banks have become increasingly cautious about lending to each other. Hypo Real Estate relies heavily on borrowing from other banks to fund its business and has suffered badly as banks have become increasingly cautious about lending to each other.
Just last week, the firm announced that it had succeeded in securing a credit facility worth 35bn euros ($48bn; £27bn), stitched together by the government.Just last week, the firm announced that it had succeeded in securing a credit facility worth 35bn euros ($48bn; £27bn), stitched together by the government.
Under the deal, the government was going to provide the lion's share of the loan, with a consortium of banks providing 8.5bn euros ($11.6bn; £6.6bn).Under the deal, the government was going to provide the lion's share of the loan, with a consortium of banks providing 8.5bn euros ($11.6bn; £6.6bn).
It was designed to make sure that Hypo Real Estate had sufficient short and medium-term funding to make sure it could function while the international money markets remained in a deep freeze.It was designed to make sure that Hypo Real Estate had sufficient short and medium-term funding to make sure it could function while the international money markets remained in a deep freeze.
But Hypo Real Estate said the banks had withdrawn support for the loan, putting the whole rescue package at risk.But Hypo Real Estate said the banks had withdrawn support for the loan, putting the whole rescue package at risk.
On Saturday, leaders of the major European economies met in Paris for talks hosted by French President Nicolas Sarkozy.On Saturday, leaders of the major European economies met in Paris for talks hosted by French President Nicolas Sarkozy.
Britain, Germany, Italy and France all agreed to work together to support financial institutions - but stopped short of agreeing a US-style bank bail-out plan.Britain, Germany, Italy and France all agreed to work together to support financial institutions - but stopped short of agreeing a US-style bank bail-out plan.
They decided instead to seek a relaxation of the EU rules governing the amount of money individual states can borrow.They decided instead to seek a relaxation of the EU rules governing the amount of money individual states can borrow.
The leaders also issued a joint call for a G8 summit "as soon as possible" to review the rules governing financial markets.The leaders also issued a joint call for a G8 summit "as soon as possible" to review the rules governing financial markets.
Are you worried about your savings? Would an unlimited guarantee allay your fears? Send your comments to the BBC using the form below:Are you worried about your savings? Would an unlimited guarantee allay your fears? Send your comments to the BBC using the form below:
In most cases a selection of your comments will be published, displaying your name and location unless you state otherwise in the box below.In most cases a selection of your comments will be published, displaying your name and location unless you state otherwise in the box below.
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