A New Framework for Bank Rescue in Germany - Regulatory Challenges for Modern Company, Corporate Insolvency and Constitutional Law

European Business Organization Law Review, Vol. 10, pp. 515-554, 2009

35 Pages Posted: 7 Nov 2009 Last revised: 29 Nov 2010

See all articles by Klaus J. Hopt

Klaus J. Hopt

Max Planck Institute for Comparative and International Private Law; European Corporate Governance Institute (ECGI)

Christoph Kumpan

Bucerius Law School

Felix Steffek

University of Cambridge - Faculty of Law

Date Written: November 1, 2009

Abstract

The financial crisis has ignited bank bailouts around the financial globe. The German legislator has responded with a number of new and modified statutes, most notably the Financial Market Stabilisation Act and the Supplementary Financial Market Stabilisation Act. These Acts allow the state to gain unlimited control over banks of high systemic relevance. To achieve unlimited control the public authorities can make use of two different approaches. The first one relies upon company and takeover law measures which are considerably simplified by the Acts during rescue attempts by the government, i.e. state-initiated takeovers. The second approach allows for the expropriation of shareholders and the nationalisation of ailing banks. While the first approach is formally less intrusive, some of its mechanisms raise doubts regarding compliance with EU and German constitutional law. The second approach avoids legal pitfalls; however, it relies on expropriation which causes widespread concerns. This paper introduces and explains the new laws, analyses them from an economic, European as well as constitutional perspective and develops a context for further research on bank rescue.

Keywords: Bank rescue, constitution, expropriation, financial crisis, insolvency, Financial Market Stabilisation Act, takeover

JEL Classification: G21, G28, G33, G34, K22, P14

Suggested Citation

Hopt, Klaus J. and Kumpan, Christoph and Steffek, Felix, A New Framework for Bank Rescue in Germany - Regulatory Challenges for Modern Company, Corporate Insolvency and Constitutional Law (November 1, 2009). European Business Organization Law Review, Vol. 10, pp. 515-554, 2009, Available at SSRN: https://ssrn.com/abstract=1501187

Klaus J. Hopt (Contact Author)

Max Planck Institute for Comparative and International Private Law ( email )

Mittelweg 187
D-20148 Hamburg
Germany
+49 40 41 90 02 05 (Phone)
+49 40 41 90 03 02 (Fax)

European Corporate Governance Institute (ECGI)

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

Christoph Kumpan

Bucerius Law School ( email )

Jungiusstr. 6
Hamburg, 20355
Germany

Felix Steffek

University of Cambridge - Faculty of Law ( email )

10 West Road
Cambridge, CB3 9DZ
United Kingdom

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