The German cabinet today finalised the conditions under which banks can make use of a €480 billion rescue package rushed through parliament last week.
If banks hit by the financial crisis apply for support their executives may earn no more than €500,000, and each lender is restricted to receiving €10 billion in capital, a finance ministry spokesman said.
Any dividend payments must go to the state and the government can also force banks to reduce or give up entirely particularly risky lending practices, as well as to continue making loans to small and medium sized firms.
The government can also buy up toxic assets from banks but this is limited to €5 billion worth per lender.
The programme, passed by lawmakers on Friday, includes €400 billion in loan guarantees in order to get banks lending to each other and up to €80 billion to shore up banks' balance sheets battered by the financial crisis.
So far, no bank has signalled its intention to apply for aid under the rescue package but press reports said that the regional Bayerische Landesbank (BayernLB), the Bavarian state-owned lender, could be among the first.
The regional bank could require 'billions of euros' in liquidity, state guarantees, and state purchases of high-risk instruments, the Bild daily cited Bavaria's finance minister Erwin Huber as saying.
