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Germany adopts 480-bln-euro bank bail-out

BERLIN - Germany's 480-billion-euro (650-billion-dollar) bank bail-out flew through parliament in an historic fast-track vote Friday to restore shattered confidence in the crisis-ridden financial sector.

The rescue package, the biggest ever in German post-war history, sailed through the lower house of parliament, or Bundestag, where 476 parliamentarians voted in favour, 99 against and one abstained.

It was then unanimously passed in the early afternoon in the upper house, or Bundesrat, comprising provincial legislators from Germany's 16 states.

There had been however been some grumbling from regional premiers earlier over the cost of the bailout, since they would have to shoulder 35 percent of the burden.

The plan, unveiled at the beginning of the week, includes up to 80 billion euros in fresh capital for banks and 400 billion euros in guarantees in order to jumpstart stalled lending between banks.

Once it has been approved by the Bundesrat, the package will be signed by President Horst Koehler later Friday so that it can come into effect on Monday.

In the lower house, the ruling conservative CDU/CSU and the Social Democrat SPD parties both voted in favour, as did the liberal FDP. The Greens and the far-left Die Linke party voted against.

Economy Minister Michael Glos said the move was crucial not just for the banks, but primarily for "the good of citizens and the economy."

"Everything must be done to restore confidence" in the financial sector, Glos said.

But Green parliamentary chief Renate Kuenast branded the proposals as ablank cheque for banks, who could still not be held responsible to taxpayers.

Berlin has been at pains to reject such charges, stressing that, in return for aid, the state will take stakes in the banks and demand influence in company decisions, the payment of dividends and even bankers' salaries.

So far, no bank has signalled its intention to apply for aid under the rescue package.

A financial source told AFP that Germany's biggest bank, Deutsche Bank, would not seek state aid.

"Deutsche Bank's capital structure is very strong, as a result there is no need to seek state aid," the source said.

In the meantime, Deutsche Bank chief Josef Ackermann said he would forego his annual bonus of several million euros to show solidarity with staff in this time of financial crisis.

Econony Minister Glos urged other bank executives to follow Ackermann's example.

Other business leaders "carry the responsibility for people and not for their own bank account," Glos said.

Chancellor Angela Merkel insisted the bail-out would help avert further harm to Europe's biggest economy, which is expected to grind to a near halt next year.

According to the government's own forecasts, gross domestic product (GDP) will expand by no more than 0.2 percent in 2009, the slowest rate of growth since the 2002-2003 recession.

Nevertheless, Finance Minister Peer Steinbrueck insisted the economy was robust enough to weather such a slowdown.

According to a poll released Friday, just one in five Germans feel personally concerned by the current financial crisis and the vast majority continue to trust their banks.

In a survey of more than 1,000 people a week ago, the GfK research institute found that even among those who have invested in financial markets, the rate increased only to 30 percent, and thus remained "moderate."

Nevertheless, two-thirds said they believed the worst was still to come in the financial sector, and more than half said they felt the world would face a general economic crisis, the survey found.