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Business

EU Launches Proceedings Against German State Banks

The European Commission said on Wednesday it had launched a formal investigation against five German state banks for accepting government aid prohibited under EU regulations. The Commission has accused the banks of transferring billions of euros worth of publicly owned government assets into their private consumer banks, thus increasing the banks' lending capacity. Private banks must generally raise funds on the private capital market, and the Commission says the state banks' usage of government assets at a favorable interest rate in the 1990s was anti-competitive. Effected are the Schleswig-Holstein state bank, the Hamburg state bank, the Norddeutsche state bank, the Hesse-Thuringia state bank and the Bavarian state bank.