May 9, 2008 / 4:40 PM / 11 years ago

Sovereign funds welcome in Germany, finmin says

BERLIN, May 9 (Reuters) - Sovereign wealth funds are welcome in Germany, Finance Minister Peer Steinbrueck said on Friday ahead of a visit to the Arabian Gulf region later this month when he is expected to meet such investors.

Many German politicians are nervous about the influence sovereign wealth funds can wield and their capacity to buy leading national companies or key national infrastructure.

The government plans to extend existing legislation that gives Berlin a veto on takeovers of defence firms to include other industries, but Steinbrueck said Germany did not want to scare off sovereign wealth funds.

“Sovereign wealth funds are welcome in Germany,” he said in the text of a speech for delivery in Bonn.

“Their commitment contributes to value creation and employment in Germany, and also to stabilisation in times of financial market turbulence, as we are currently experiencing.”

Steinbrueck has previously described the German plans to defend domestic firms as modest compared to those of other countries, including Britain, France and the United States.

The planned new legislation will not name “strategic” sectors that are off-limits to foreigners.

“We will not lead the discussion about sovereign wealth funds so as to stimulate protectionist powers in Germany,” Steinbrueck said in his speech on Friday.

Weekly magazine Der Spiegel reported last month that Steinbrueck planned late in May to meet the managing director of the Kuwait Investment Authority (KIA), a leading sovereign wealth fund, to improve their relations.

Steinbrueck was also expected to meet the chief of the Abu Dhabi Investment Authority and planned to take a delegation of parliamentarians with him, seeking to improve mutual understanding, Der Spiegel added.

A Finance Ministry spokesman confirmed the minister planned to travel to the Gulf region later this month.

Government-owned investment vehicles control over $2 trillion — roughly the size of France’s economy — and are forecast to grow rapidly to $12 trillion by 2015.

In recent months, funds from Asia and the Middle East have injected money into major banks like Citigroup Inc (C.N), Merrill Lynch & Co Inc MER.N and UBS AG UBSN.VX after they were hit by exposure to the U.S. subprime crisis. (Writing by Paul Carrel, editing by David Christian-Edwards)

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