Germany guarantees all private savings accounts: ministry

BERLIN, October 5, 2008 (AFP) – The German government has offered an unlimited guarantee for all private savings accounts, a finance ministry spokesman told AFP Sunday, amid the spreading financial crisis.

German Chancellor Angela Merkel said earlier in a statement to reporters: “We tell all savings account holders that your deposits are safe. The federal government assures it.”

The conservative leader made the remarks as she said her government was scrambling to salvage a rescue plan for German bank Hypo Real Estate so “an institution’s crisis does not become a crisis for the entire system”.

Finance Minister Peer Steinbrueck said in a joint statement that German taxpayers need not worry about “a single euro of their deposits” in the crisis.

German law foresees a minimum guarantee for private deposits of 20,000 euros (28,000 dollars). All savings accounts are normally completely covered by federal deposit insurance. But the savings deposit insurance fund of the Federal Association of German Banks was hit by heavy losses linked to the bankruptcy of US investment bank Lehman Brothers in September.