Germany's cabinet agreed to a new tax on banks, with Berlin continuing to press other governments to implement a similar levy to help meet the costs of future financial crises.

The move for banks to contribute to a new fund comes two years after the implosion of the US investment bank Lehman Brothers helped to push the global economy into its deepest recession in a generation.

The government hopes to raise about 1.3 billion euros (1.64 billion dollars) each year from the new tax, which is due to come into force in January.

Finance Minister Wolfgang Schaeuble told a meeting of foreign correspondents Wednesday that the new law was not so much aimed at banks that 'were too big too fail' but 'too interconnected to fail.'

France and Britain have joined Berlin in pursue a global tax on banks to help meet the costs of rescuing troubled banks despite opposition from other key members of the Group of 20 leading economies.

Berlin's so-called bank restructuring bill forms a key part of Germany's efforts to confront the fallout from the global financial crisis. This includes cutting back the budget deficit that had ballooned out as result of Berlin's efforts to shield the nation's economy from recession.

But equally important for Germany, said Schaeuble, was revamping financial market regulation and filling the gap in market supervision that were exposed by the crisis.

However, he also said it was unlikely that the world's top economies would agree in the near term to launch a financial transaction tax, which would be imposed on transactions.

Berlin to press other countries

Despite the G20 leaders having waved off the German drive for the tax at their June summit in Toronto, Schaeuble said Berlin would again press the case for the bank tax as part of the next G20 meeting in Korea in November.

But divisions have emerged over the operations of the tax even among the countries pressing for its implementation. Berlin is concerned that Britain's plans for a bank surcharge could result in German banks being forced to pay the tax twice.

However, Schaeuble said he hoped the problems with London would be solved at the European Union level.

Germany's private banks, which includes the nation's biggest bank Deutsche Bank AG, have welcomed the new bank levy as helping to shore up insolvency measures for the banking sector.

The Social Democrat-led opposition has, however, attacked the plans, claiming the tax is too low and warning that the banks might try to offload the cost of the charge onto consumers.

Germany set up its so-called SoFFin fund in October 2008 as part of its drive to bolster confidence in the nation's financial system as the financial crisis gained ground.

The fund was backed by 480 billion euros in taxpayers' money.
Under the tax is to be imposed only once a year and should not exceed 15 per cent of the lender's annual profit. A minimum contribution is expected even if the bank fails to turn in a profit.

dpa