German 'bad banks' head for Dublin

Dublin could become a bad bank capital as German financial institutions take advantage of local talent and light-touch regulation to store their toxic assets.

German state bank West LB has already set up a bad bank with €23 billion worth of bad assets under the name Phoenix; other Germans banks say they may follow suit.

The move has raised political concerns in Berlin that by setting up once more in Dublin, held in very low esteem by German government officials, the banks are returning to where their problems started.

As one leading government official remarked last week about Ireland: “I’m not surprised that they are heading to a regulation-free zone.”