Germany sees no need to create "bad bank"

Special Report:Global Financial Crisis

BERLIN, Dec. 22 (Chinese media) -- The German government rejected on Monday calls for creating a "bad bank" to take over high-risk assets from financial institutions, saying there was "no need" at present.

"We don't see any urgent need to make a decision about this," said deputy government spokesman Thomas Steg.

Recent reports said German banks want to see such an institution created by the government to take over underperforming loans and other bad debt off the hands of the banks so that they can improve their credit ratings and resume cheap borrowing.

The German government has "done its homework" in setting up a financial stabilization fund for banks, who are now responsible for making use of it, the spokesman said.

Steg said Germany had already made provision in a 480-billion-euro (around 670 billion U.S. dollars) package of aid for the banking industry to take over bad debt, but banks had not taken up the offer.

"I think it would be wise to wait and see," Steg said, adding that if new dangers from bad debt developed, there might be a need for the international community to act.

Germany's aid package, which was announced in October, met a chilly reaction from some banks because aid from Berlin comes with conditions, including banks slashing the pay of chief executives and accepting government equity.