On 31 March 2010, the German government introduced cornerstones relating to a bank stabilisation fund to be funded by all banks and to implement reorganisation procedures allowing for liquidation of credit institutions of systemic importance without putting the financial markets at risk (Cornerstones). Further to these cornerstones and following the conclusion of the consultation period, on 25 August 2010 the German government issued the draft Restructuring Act (Gesetz zur Reorganisation von Kreditinstituten) (Act).

The Act sets our rules to reorganise or wind down distressed credit institutions of systemic importance, among other things, by transferring assets and liabilities of a relevant institution (in whole or in part) to another entity (the "bridge entity") to restructure the business of such institution and so as to avoid insolvency procedures.

In line with the Cornerstones, the Act provides for the establishment of a restructuring fund to be financed by a bank levy paid by all credit institutions operating in Germany, meaning all institutions that both:

These include:

As currently drafted, the Act would not apply to branches of foreign credit institutions operating under an EU passport under section 53b of the German Banking Act.

The Act is expected to enter into force in 2010.