German cabinet approves European banking supervision | Business| Economy and finance news from a German perspective | DW | 08.05.2013
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German cabinet approves European banking supervision

The German government has endorsed a banking supervision scheme which gives more powers to the European Central Bank (ECB). Separately, the cabinet took steps to strengthen shareholders' rights.

The German cabinet on Wednesday approved the first phase of a European plan to create a banking union in the 17-member eurozone.

The coalition of Christian Dremocrat and pro-business Free Democrat ministers backed the creation of a banking supervisor under the ECB. This initial step is to be followed by a scheme which will enable member states to decide jointly on closing, or salvaging, struggling lenders.

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EU summit agrees on banking supervision

The ECB is to supervise the bloc's biggest banks which operate across national borders. Smaller lenders are to stay under the control of national authorities.

EU member states and the European Parliament agreed last March on the need for a cross-border, banking supervision mechanism. The aim was to prevent governments having to support ailing lenders with taxpayers' money.

The new supervisory scheme is to apply to all 17 countries in the eurozone, with other EU members free to join.

Shareholders' rights

The German cabinet on Wednesday also took steps to strengthen shareholders' rights by giving them a say in defining the annual salaries of top managers. Investors will be able to debate and decide on managers' salaries at annual shareholder meetings. These decisions were previously made by the firms' supervisory boards.

The cabinet refrained from setting a legally binding ceiling for managers' salaries. The lower house of the German parliament has to approve the government's decision.

hg/jm (dpa, AFP, Reuters)

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