(Adds comments, background.)
BERLIN (Dow Jones)--Germany has to come to a solution on its plan to set up bad banks to take on banks' toxic assets "rather quickly," German Economics Minister Karl-Theodor zu Guttenberg said Monday.
He said the government is working toward a quick solution because it wants to present a draft bill by May 13.
Speaking to reporters after a meeting with banks and company representatives on company funding, he also said talks showed that Germany isn't suffering from a far-reaching credit bottleneck yet, although some companies might experience difficulties.
"The most important news today is: no nationwide credit squeeze, but increasing liquidity shortages," zu Guttenberg said.
He said participants in the meeting expressed concern that credit demand would actually decrease due to the weak economy.
Zu Guttenberg's comments on the bad banks plan come as Germany is in the process of considering two models. In the first model favored by the government, private banks would offload only toxic assets to a special-purpose vehicle that in return would issue a government-guaranteed bond amounting to the book value of those assets.
The second model would involve setting up an institution to help Landesbanken, in particular, restructure by transferring problematic assets and non-strategic assets to the new-found institution, with the former owners still liable to the risks stemming from those assets.
Finance Minister Peer Steinbrueck said last Monday that he and officials from German states owning the Landesbanken are examining whether a combination of these two models is possible.
website: www.bmwi.de
-By Andrea Thomas, Dow Jones Newswires; 49-30-288-8410; andrea.thomas@dowjones.com
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(END) Dow Jones Newswires
May 04, 2009 07:46 ET (11:46 GMT) | 
