BERLIN -(Dow Jones)- The bailout of German banks hit by the financial crisis is likely to cost between EUR34 billion and EUR52 billion, according to a study conducted for the Initiative New Social Market Economy, or INSM.
The study, released Thursday, estimates that the costs will amount to 1.4% to 2.2% of gross domestic product in Germany, or EUR417 to EUR632 per capita. It also recommends that the government gradually end its shareholding in banks.
"When comparing the costs in Germany with all other banking crises [of the past], Germany is at the lower end," said Christoph Kaserer, professor for economics at the Technische Universitaet university in Munich and author of the study.
The bailout of banks in Sweden cost around 4% of GDP, the savings and loan crisis in the U.S. in the early 1980s cost 3.7% of GDP, while the big banking crisis in Japan dented GDP by between 10% and 20%, Kaserer said, citing estimates.
But lessons mut be learned in Germany because most of the costs in this country, around 80%, will be generated by the state-owned banks.
"This is the price for bad control and a long-lasting tolerating of insufficient business models," Kaserer said. "This shows once more: the state isn't the better businessman."
It's important that the public sector withdraws from its stakes in banks "in the medium-term," he said.
Website: www.insm.de
andrea.thomas@dowjones.com
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