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German cabinet backs bank nationalization

GERMAN Chancellor Angela Merkel's cabinet approved a draft law today which would allow Berlin to nationalize stricken banks to shore up the financial system, a government source said.

The bill paves the way for the government to take control of Munich-based lender Hypo Real Estate and leaves open the possibility of an expropriation of its shareholders as a last resort.

Hypo has received a total of 102 billion euros in guarantees from the state and fellow banks but its financial condition remains shaky.


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