Germany is urging the European Union (EU) to relax the rules for small banks in the country that form an important part of the country’s banking industry.
Bloomberg reported that the German parliament will be taking up a resolution to urge the EU to not include the local lenders of the member states in the banking rules.
Smaller savings banks and credit cooperatives in Germany are an important part of the country’s banking industry and their combined deposits are said to exceed those of commercial banks led by Deutsche Bank and Commerzbank.
The resolution will be taken up by the governing coalition of German Chancellor Angela Merkel that comprises German lawmakers Volker Kauder, Gerda Hasselfeldt and Thomas Oppermann.
The EU is working on plans to make access to capital markets easier for companies. However, the German Parliament wants to make sure that this does not create a roadblock for banks to lend money in the process.
The report said: "Access to financing from banks shouldn’t get harder because of the capital market union. We must also think about improvements of bank financing for small companies. Credit supply for small and medium companies from small banks can be helped if the regulatory regime is adapted for them, leaves enough freedom and the proportionality of regulation is observed."
Germany has voiced its dissatisfaction with the EU banking rules that apply to its smaller banks on multiple occasions. However, the commission has rejected its pleas saying that the rules that were set in place after the 2008 financial crisis apply to all of EUs 8,300 banks.
As part of its plan to encourage capital markets, EU financial services chief Jonathan Hill has been working on a policy to promote asset-backed securities and to lower the limits for cross-border investments in small companies.
Image: Germany will present a resolution asking EU to support the country’s smaller banks that form the backbone of its banking industry. Photo: courtesy of twobee/freedigitalphotos.net.