SWF Radar Germany

Michael Fischer, a partner at Reed Smith in Germany, has written a backgrounder (subscription required) on the changes that are being made to the German law on foreign trade to address the issues raised by sovereign wealth fund investment.

The Times writes that, “President Sarkozy is set for a showdown with Angela Merkel today after infuriating the German Chancellor with the launch of a €100 billion (£80 billion) French sovereign investment fund that he exhorted other European governments to copy.”

Thomson Reuters reports that, “Germany poured cold water on French President Nicolas Sarkozy’s proposal that Europe should have its own sovereign wealth funds to take stakes in companies stricken by the global finance crisis.”

iT ADDS THAT, “Economy Minister Michael Glos, leading a chorus of opposition from Berlin, said in a newspaper interview to be published on Wednesday that Sarkozy’s plan ran counter to the system that has worked well in Europe for decades.”

Financial News reports (subscription required) that, “The German Government took a neutral stance during the acquisition of Dresdner Bank and, contrary to rumour, did not rule out its purchase by a sovereign wealth fund, according to Martin Blessing, the chief executive of Commerzbank.”

The Deal writes that, “German business doesn’t want it, the European Union is highly suspicious of it and the City of London hopes for a lucrative windfall. But Germany’s government has pressed ahead with it anyway.”

Thomson Reuters reports that, “Germany’s cabinet agreed on Wednesday to bring in rules to protect domestic firms from foreign buyers, notably sovereign wealth funds (SWFs), who could exert political influence, a German government official said.”

Thomson Reuters reports that, “Nearly 300 workers from German shipping group Hapag-Lloyd protested on Tuesday against a possible takeover by Singapore’s NOL a day before the cabinet is due to pass a law to shield domestic firms from foreign buyers.”

The article adds that, “[T]he offer by NOL, 66 percent owned by Singapore state investor Temasek Holdings, has caused concern in Germany, not least about possible job cuts, and the government has welcomed the Hamburg bid to keep the firm in German hands.”

The Telegraph writes that, “Germany’s cabinet is expected to approve a far-reaching new law this week to stop ‘giant locust funds’ from Russia, China and the Middle East from launching takeover raids on the country’s prized industries.”

The article adds that, “Stephen Jen, currency chief at Morgan Stanley, said Britain’s open-door policy means that the City would be the chief beneficiary of the German plan. ‘The funds can use operations listed in London,’ he said.”

Thomson Financial reports that, “Russian billionaire Alexander Lebedev, who is seeking to buy tour operator Oeger Tours, has warned Germany against investments by Russian sovereign wealth funds because of corruption he says exists in the country’s bureaucracy. In an interview with Welt am Sonntag, Lebedev also expressed sympathy with the German government’s aim to control investments by sovereign wealth funds in industries that affect its national security.”

The Wall Street Journal reports (subscription required) that, “The German government’s cabinet is scheduled on August 20 to vote on a draft bill that would give the Economics Ministry the power to block unwanted foreign takeovers of German companies – a step that some people from the German industrial sector warn could deter investment.”

The article says that the threshold for ownership will be 25 percent ownership and that, if passed, parliament is expected to approve the bill in the fall, leading to its becoming law in January.