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Business

First German Bank Set to Request State Support

German banks said Sunday that they would discuss a new state rescue plan as it comes into effect, following a report the banks were considering making joint demands for aid.

A life buoy sits at the bank of the river Spree in front of the Reichstag

Banks plan to take a close look at the German bailout plan

The talks "will take place as part of a regular meeting of bank representatives" on Monday, said a spokeswoman for the Union of German Banks (DSVG), which has 17 regional bank members.

A report on Saturday said the banks would consider unifying their demands one day after the German parliament rushed through a 480 billion euro ($650 billion) bailout plan that goes into effect Monday.

Regional bank BayernLB was the first to announce its intention to ask for state aid, according to the mass-market daily Bild.

BayernLB could on Tuesday ask for help under the rescue plan, the paper said, quoting the Bavarian minister of finance, who heads the bank.

Fund opens Monday

A stone lion outside the BayernLB building

BayernLB appears likely to be the first bank to give the state shares in exchange for funds

The bank could require "billions of euros" in liquidity, state guarantees, and state purchases of high-risk instruments, Erwin Huber told the Bild. "The bank will present its figures on this on Tuesday."

Starting on Monday, banks can make direct requests for guarantees on loans of less than 36 months from other banks, with the government setting aside 400 billion euros for the purpose. The government is planning to limit the state support to a maximum of 10 billion euros per bank, the Financial Times Deutschland was set to report in its Monday edition.

Banks will also be able to request direct investment from an 80 billion euro state fund in exchange for equity shares. Deals between the banks and the state are to be made on a case-by-case basis and will only be made public if a bank's regulations require it.

Over the weekend, Commerzbank head Martin Blessing said the country's second-largest bank would look over the bailout plan's provisions, while Josef Ackermann said Deutsche Bank would not accept state aid. He added that Deutsche Bank had "at no point" been serious danger during the market crisis.

Unconstitutional bailout package?

Judges at the German Constitutional Court

Franz has to wait to hear if judges will hear his case against the state

Meanwhile, a small-business owner said he intends to take the government to Germany's highest court.

Markus Franz, who runs a employs three people at his IT company in Jena, said Sunday that he filed a complaint at the German Constitutional Court because the bailout package runs contrary to the constitution's equal treatment guarantees by helping banks but not other companies suffering from the global financial crisis.

The court, on Sunday, did not say whether it would accept Franz's case.

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