Germans move millions into state-controlled banks

— State-owned savings banks in Germany are reporting a flood of new deposits as people look for security amid the global economic crisis.

Several state-owned banks — known as "Sparkassen" — said Tuesday that even with a government pledge to guarantee all savings they were seeing scores of new customers.

"At the moment, security is at the forefront for the customers," said Volker Schleede, spokesman for the Sparkasse Essen.

Accounts in local savings banks often carry lower interest rates than those offered by commercial banks, but are seen as safer investments because accounts held there are insured for 100 percent of their value.

Deposits in commercial banks are legally insured up to 20,000 euros ($US27,000).

Other savings banks across the country also reported spikes in deposits.

Gerd Meyer, a spokesman for the Stadtsparkasse Duesseldorf, said that the bank has an additional 80 million euros ($108 million) in new deposits in the last week. The bank's two-week total is 200 million euros ($271) in new cash.

"To give you some perspective, that's close to as much as we received all of last year," Meyer said.

On Sunday the federal government announced that all deposits in privately held bank accounts — including savings, checking and time deposits, or CD's — would be guaranteed. But since then it has said the guarantee would not necessarily be backed by legislation or financial action.

"It is a political statement, a political guarantee; it is not linked with a legislative process or a parliamentary decision," government spokesman Thomas Steg said at a regular news conference in Berlin. "We believe that, with this guarantee, the purpose is fulfilled of achieving a calming of the situation."

The move in funds from commercial to state-run banks suggests that the declaration may not yet have achieved that goal.