Germany's government moved Wednesday to reactivate its financial sector rescue fund as the eurozone debt crisis raises more questions about how banks can cover their capital needs. Chancellor Angela Merkel's spokesman, Steffen Seibert, said the Cabinet decided to reopen for aid applications the €360 billion ($474 billion) fund, first established at the height of the 2008 financial crisis. It was closed at the end of 2010, but continued to help banks that were still receiving aid. The move should help “restore impaired confidence in the finance industry and, above all, reduce as far as possible the burden for the German economy,” Seibert said. Most of the money in the fund - which totaled €60 billion for potential capital injections and €300 billion for loan guarantees - remains untapped. At present, only €19.8 billion of the recapitalization money and €28.2 billion in guarantees are spoken for. In order to restore confidence in banks and hopefully restart more normal lending, European Union leaders decided in October to make banks raise more money to reassure markets that they're prepared to weather coming storms. Last week, the European Banking Authority said the continent's banks need to raise about €115 billion to meet the new standard meant to protect lenders against market turmoil, including bad government debt. German banks need a total of €13.1 billion in new capital to comply with the new requirements. The country's second-biggest bank, Commerzbank AG, has been told it needs €5.3 billion. The bank said it had completed a complex, previously announced transaction aimed at improving its capital structure which would add more than €700 million to its so-called core tier 1 capital. Commerzbank has moved to pay back aid it received from the government following the 2008 crisis, but the bank rescue fund still holds a 25 percent stake in the lender. Germany completely nationalized only one bank in the financial crisis, the stricken commercial property lender Hypo Real Estate.
