Financial Market Stabilisation Act: Institute studies the acquisition of system-relevant banks
18.05.2009
The global financial crisis has also led banks in Germany to the edge of insolvency, and headlines are currently being made by Hypo Real Estate, a bank with considerable relevance for the financial markets. Its possible insolvency has generated fears of finance market repercussions similar to those witnessed in the wake of the Lehman Brothers collapse in the fall of 2008. In order to avoid a renewed destabilisation of the financial system, the German government has enacted a number of measures which aim to support system-relevant banks threatened with insolvency. The legal basis for these efforts is the Financial Market Stabilisation Act (Finanzmarktstabilisierungsgesetz - FMStG) of 17 October 2008 and the Supplemental Financial Market Stabilisation Act (Finanzmarktstabilisierungsergänzungsgesetz - FMStErgG) of 7 April 2009. A central concern of the April amendment is allowing for the unlimited public acquisition of system-relevant banks. As a last resort, the expropriation of shareholders and nationalisation of banks has now been anchored into the law.The study completed by the scholars from the Max Planck Institute considers why and under which prerequisites the state may contemplate assuming unlimited control of system-relevant banks. Thereafter the study analyses the two primary mechanisms which would allow such control to be realised: acting with and without the expropriation of stock rights as provided for by the new emergency takeover provision (Rettungsübernahmegesetz) enacted as part of the Supplemental Financial Market Stabilisation Act. Both mechanisms are examined in respect of their implementability as well as their compatibility with European and German constitutional law.
The study is based on written testimony before the financial committee of the German Parliament and has been published by Dr. Dr. Dr. h.c. mult. Klaus J. Hopt, Dr. Andreas M. Fleckner, LL.M. (Harvard), Dr. Christoph Kumpan, LL.M. (Univ. of Chicago) and Dr. Felix Steffek, LL.M. (Cambridge) in the Zeitschrift für Wirtschafts- und Bankrecht (WM) 2009, Issue 18, pp. 821 – 834. Additionally, Daniel Annoff has authored an overview of the study which appeared in the Börsenzeitung from 29 April 2009 at page 2.
Artikel in Börsen-Zeitung: Verstaatlichung systemrelevanter Banken gut begründet (in German)
Inhaltsverzeichnis der Wertpapiermitteilungen (WM) (in German)