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Germany moves towards 'bad bank'

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Germany moves towards 'bad bank'

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Germany’s cabinet has backed a so-called “bad bank” plan for the regional Landesbank sector.

If passed by parliament, it will allow the publicly owned state lenders to offload toxic assets – that is loans that are very unlikely to be repaid – and problematic business activities into a separate bank for bad debts. The Landesbank sector will be consolidated by the end of next year in return for the federal government’s help.