There has been a great deal of discussion lately about the use of so-called “bad banks” which are state-controlled banks created to acquire and hold the non-performing assets of banks hit by the financial crisis.

While the use of a bad bank had also been discussed in Germany, the German Minister of Finance, Peer Steinbrück, recently announced in an interview with the German business daily Handelsblatt, that Germany will not create a “bad bank”, noting that the German legislature would not be able to conclude the complex legislative process needed to establish such a bank prior to the September 2009 federal elections.