Eichel (German Finance Minister) says KfW Need Not Sell Post & Telekom Shares
The German government can place its remaining stakes in Deutsche Telekom AG and Deutsche Post AG with state-owned bank Kreditanstalt fuer Wiederaufbau without forcing KfW to sell shares, Finance Minister Hans Eichel said.
“We can place the shares with KfW and sell on to the market at a time when share-price developments seem appropriate,” Eichel, 62, said in an interview at the German parliament in Berlin. “I am not dependent on selling to the market.”
Eichel plans to sell or transfer assets worth 15.4 billion euros ($18.6 billion) next year to help bring down Germany’s debt, which is above European Union limits. By 2006, the government wants to dispose of its 26 percent stake in Telekom, Europe’s largest phone company, and its 20 percent holding in Deutsche Post, Europe’s biggest postal service.
The government started selling shares of the former post and phone monopolies to Frankfurt-based KfW in 1996 under Chancellor Helmut Kohl. The bank now holds 42.5 percent of Deutsche Post and 16.7 percent of Telekom, administering the shares ahead of an eventual sale.
“That policy is absolutely reasonable,” Eichel said in a separate interview with German broadcaster ARD. “It’s an old mechanism that the previous government made use of.”
Still, the main opposition Christian Democratic Union says Eichel has little leeway to place further shares with KfW. The bank must first dispose of some of the shares it holds before it can take on further government holdings, said Dietrich Austermann, the opposition’s parliamentary budget spokesman.
“The KfW would become the majority shareholder in Deutsche Post if Eichel keeps parking shares at the bank,” Austermann said in a telephone interview. “It’s a clear infringement of corporate accounting rules.”
`Hidden Borrowing’
Germany’s Federal Audit Court has echoed the opposition’s view. In a 19-page report published last November, the Bonn-based court urged the government to “forgo” further share placements with KfW. The policy amounts to “hidden borrowing” and is an “inefficient” tool for budget policy, the report said.
In December last year, KfW sold 2 billion euros of securities in Deutsche Post through Deutsche Bank AG and Goldman Sachs Group Inc. KfW spokeswoman Nathalie Druecke refused to comment when asked about the consequences a further transfer of government shares would have for the bank.
France Telecom
Other European governments are also selling assets to reduce debt. The French government last week raised 5.1 billion euros by selling a 10.85 percent stake in France Telecom SA in the world’s biggest share sale this year. France’s debt last year amounted to 992 billion euros, or 63.7 percent of gross domestic product, above the EU’s 60 percent limit. Germany’s debt was 1.37 trillion euros, or 64.2 percent, up from 60.8 percent in 2002, according to the EU statistics office, Eurostat.
Eichel is seeking next year to limit new borrowing to 22 billion euros, the lowest since he took office almost 5 1/2 years ago. In parliament today, the finance minister said the government “will do everything we can” to keep the 2005 deficit below the EU limit of 3 percent of gross domestic product following three successive breaches of the deficit rule.
Deputy Finance Minister Karl Diller said last week that Eichel would present a supplementary 2004 budget in the coming weeks to allow for borrowing this year between 10 billion euros and 11 billion euros more than the original target of 29.3 billion euros.
Eichel last week raised his forecast for this year’s deficit to 3.7 percent of GDP from the previous 3.25 percent.
To contact the reporter on this story:
Andreas Cremer in Berlin at [email protected] and Thomas Bauer at [email protected].
