German banking CEOs in firing line over bail-outs Government spells out terms and salary caps

FRANKFURT – The German Cabinet yesterday approved the terms that banks will have to accept in order to benefit from its US$645 billion bail-out plan – including a salary cap of US$670 200 for top bank managers.

Those managers would also be obliged to forgo bonuses and dividend payments as long as their banks were indebted to the government. The federal bail-out plan approved by parliament Friday includes up to US$538 billion in lending guarantees for banks, plus as much as US$107 billion to recapitalise banks and, if necessary, buy up risky assets.Leaders of Germany’s largest commercial banks said last weekend that they would not immediately seek money on those terms.Josef Ackermann, the chief executive of Germany’s biggest private bank, Deutsche Bank, has said his company does not need capital from the state.Martin Blessing, the CEO of Germany’s second-largest bank, Commerzbank, was quoted as saying by the Bild on Saturday newspaper that his company would look at the package and see “whether it comes into question for us”.According to Deutsche Bank’s 2007 annual report, Josef Ackermann’s total compensation including salary, benefits and shares amounted to almost US$18,9 million last year.Commerzbank’s annual report said its outgoing CEO Klaus-Peter Mueller received total compensation of US$4,32 million in 2007, not including shares and some other benefits.The company’s new chief executive since May, Martin Blessing, received compensation of US$2,7 million in 2007, not including shares and some other benefits.State bank BayernLB, however, said it wants to accept money from the package as soon as possible.”It’s about achieving a fast stabilisation,” said Erwin Huber, BayernLB’s administrative board chief and the finance minister of the southern state of Bavaria.Huber did not say how much the bank would seek to borrow, but said that in order to meet the government’s conditions for the money, the bank would have to be restructured, partially privatised or merged with another bank.BayernLB and other public-sector wholesale banks – which are owned by a combination of state governments and municipally backed local banks – have faced hefty write-downs as a result of the subprime lending and credit crisis.The seven German Landesbanks are currently reviewing whether to take up the government’s bail-out package offer.A spokesperson for HSH Nordbank said the bank was still looking at the package, while a spokesperson for Landesbank Baden-Wuerttemberg told Associated Press it was not interested in any bail-out compensation.”LBBW stands in the point of liquidity and capital, and in comparison to the sector, is in good shape” the bank’s chief executive, Siegfried Jaschinski, said last week.LBBW is Germany’s largest state bank.Last week, state banking officials confirmed that Bayern LB was discussing a possible merger with Landesbank Baden-Wuerttemberg, also in the country’s economically strong south.Huber said he was in favour of the conditions that government has imposed on banks that want to take help.”Performance has to be linked with responsibility,” Jaschinski said.Nampa-APThe federal bail-out plan approved by parliament Friday includes up to US$538 billion in lending guarantees for banks, plus as much as US$107 billion to recapitalise banks and, if necessary, buy up risky assets.Leaders of Germany’s largest commercial banks said last weekend that they would not immediately seek money on those terms.Josef Ackermann, the chief executive of Germany’s biggest private bank, Deutsche Bank, has said his company does not need capital from the state.Martin Blessing, the CEO of Germany’s second-largest bank, Commerzbank, was quoted as saying by the Bild on Saturday newspaper that his company would look at the package and see “whether it comes into question for us”.According to Deutsche Bank’s 2007 annual report, Josef Ackermann’s total compensation including salary, benefits and shares amounted to almost US$18,9 million last year.Commerzbank’s annual report said its outgoing CEO Klaus-Peter Mueller received total compensation of US$4,32 million in 2007, not including shares and some other benefits.The company’s new chief executive since May, Martin Blessing, received compensation of US$2,7 million in 2007, not including shares and some other benefits.State bank BayernLB, however, said it wants to accept money from the package as soon as possible.”It’s about achieving a fast stabilisation,” said Erwin Huber, BayernLB’s administrative board chief and the finance minister of the southern state of Bavaria.Huber did not say how much the bank would seek to borrow, but said that in order to meet the government’s conditions for the money, the bank would have to be restructured, partially privatised or merged with another bank.BayernLB and other public-sector wholesale banks – which are owned by a combination of state governments and municipally backed local banks – have faced hefty write-downs as a result of the subprime lending and credit crisis.The seven German Landesbanks are currently reviewing whether to take up the government’s bail-out package offer.A spokesperson for HSH Nordbank said the bank was still looking at the package, while a spokesperson for Landesbank Baden-Wuerttemberg told Associated Press it was not interested in any bail-out compensation.”LBBW stands in the point of liquidity and capital, and in comparison to the sector, is in good shape” the bank’s chief executive, Siegfried Jaschinski, said last week.LBBW is Germany’s largest state bank.Last week, state banking officials confirmed that Bayern LB was discussing a possible merger with Landesbank Baden-Wuerttemberg, also in the country’s economically strong south.Huber said he was in favour of the conditions that government has imposed on banks that want to take help.”Performance has to be linked with responsibility,” Jaschinski said.Nampa-AP