The US Justice Department sued German giant Deutsche Bank Tuesday for more than $1 billion for mortgage fraud, saying the bank illegally obtained government insurance for substandard mortgages during the US housing boom, Agence France-Presse reported. Deutsche Bank and its subsidiary MortgageIT "repeatedly lied to be included in a government program to select mortgages for insurance by the government," the Justice Department complaint said.

In an interview with the left-leaning German daily Die Tageszeitung published Thursday, Simon Johnson, former chief economist of the International Monetary Fund, described Deutsche Bank CEO Josef Ackermann as "one of the most dangerous bankers in the world," Spiegel Online reported. Johnson singled out Ackermann's famous target of a 25 percent pretax return on equity for particular criticism. He said such returns were only possible because Ackermann knows that Deutsche Bank is too big to fail and that it would be "rescued by taxpayers" if it was faced with bankruptcy.

WestLB's owners and management are still working on three plans for the troubled German lender, two people familiar with the matter told Dow Jones Tuesday. The three options that owners and management are working on are a complete sale of the bank, downsizing the bank by 30% and transforming WestLB into a bank focusing on the Verbund business, which provides central banking services to the region's savings banks, the people said. More detailed plans for all three proposals will be handed in to the European competition authority on Friday.

Two of Germany's public-sector lenders are expected to fail European "stress tests" if they can't find a way around new regulations prohibiting inclusion of some non-voting government stakes in their core capital ratios, The Wall Street Journal reported. NordLB and Helaba were among the rare German banks that survived the financial crisis without any state aid. However, both banks are dangerously low on capital when their silent participations, a special type of subordinated debt that makes up as much as half of the banks' capital, is discounted.

German state-controlled lender Landesbank Baden-Wuerttemberg, or LBBW, will likely kick off the sale of its German residential property portfolio worth about EUR1.3 billion ($1.8 billion) this summer, a spokesman for the bank said, Dow Jones Daily Bankruptcy Review reported. The LBBW spokesman said the bank "is preparing the sale of LBBW Immobilien's residential real estate, as required by the EU." However, a final decision over the details of the sale "will likely take until the summer of 2011," considering legal aspects and the complexity of the issue involved, the LBBW spokesman said.

Chancellor Angela Merkel Thursday said she would seek to secure an agreement for Germany to spread its contributions to the euro zone's permanent bailout fund over five years instead of the three- to four-year timeline European Union leaders had been discussing, The Wall Street Journal reported. Germany had agreed, at a meeting of finance ministers in Brussels on Monday, to make €22 billion ($31.03 billion) in total contributions to a permanent bailout fund that would take effect in 2013, Mrs.

Chancellor Angela Merkel Thursday said she would seek to secure an agreement for Germany to spread its contributions to the euro zone's permanent bailout fund over five years instead of the three- to four-year timeline European Union leaders had been discussing, The Wall Street Journal reported. Germany had agreed, at a meeting of finance ministers in Brussels on Monday, to make €22 billion ($31.03 billion) in total contributions to a permanent bailout fund that would take effect in 2013, Mrs.

Germany is bracing itself for the loss of 5 million workers over the next 15 years as it becomes Europe's first and biggest test of the problems caused by an ageing and declining population. Having used generous job subsidies to steer the labour market through the country's worst downturn since the 1930s, labour and social affairs minister Ralf Brauksiepe told the Guardian on Thursday that a longer working life and an influx of skilled workers from overseas were the answer to the demographic time bomb.

New data suggests Germany’s tough stance with Ireland may have its drawbacks — for German banks, the Real Time Brussels blog reported. Irish Prime Minister Enda Kenny clashed at a Brussels summit on Friday with German Chancellor Angela Merkel over her demands to raise Ireland’s low 12.5% corporate tax rate. European diplomats say this showdown is unlikely to end with Germany just giving up. However, another battle could be brewing, which could lead to a different result. Ireland was back in Brussels Monday.

Prior to the financial meltdown, Germany’s ailing state-owned banks -- with government backing -- borrowed hundreds of billions of euros at favorable terms and invested the money in what they believed to be highly profitable securities. But after the collapse of US investment bank Lehman Brothers, many of these investments proved to be toxic, Spiegel Online reported. The government had to rush to the banks' aid with billions in bailout funds, but the banks still have large numbers of the toxic securities on their books. All attempts to tackle the problem have failed.