BERLIN, April 11 (Reuters) – The Bundesbank will not agree to any new national financial supervision structure that might impinge upon its independence, a board member of the German central bank said in a newspaper interview published on Sunday.

Financials

Franz-Christoph Zeitler told the Welt am Sonntag weekly that the Bundesbank is in principle willing to play a greater role in banking supervision if the government requests it.

But he pointed out there was no central bank in the euro zone under the control of a finance ministry and noted that view was shared by the entire Bundesbank board, thus setting the stage for a showdown with Chancellor Angela Merkel’s government.

“The Bundesbank didn’t push forward and seek to take complete control of banking supervision,” Zeitler said.

He added the Bundesbank could only agree to plans put forth by Merkel’s centre-right government if financial watchdog BaFin is integrated into the Bundesbank and independence is preserved.

Under one “holding group” model, a new Bundesbank “holding group” would be set up by law to control three pillars, according to media reports.

BaFin would become one pillar and would lead supervision of the banking sector, insurers, and securities trading. Financial supervision is now divided between BaFin and the Bundesbank.

The Bundesbank, with its responsibilities for monetary policy, would remain as a second pillar — without its existing banking supervision tasks.

Next to the first two pillars, bank rescue fund Soffin, which was set up in October 2008 in response to the financial crisis, would be developed into a permanent emergency fund for banks and insurers.

Welt am Sonntag said parliament and the government insist they have control because if a rescue is needed taxpayer money would be at stake. But the Bundesbank rejects the model because it fears its independence could be compromised if the Finance Ministry would have a say in a key Bundesbank area. (Writing by Erik Kirschbaum; editing by Mike Nesbit)