Merkel to empower bank regulator

London - German Chancellor Angela Merkel would give the nation's banking supervisor extensive powers over struggling banks, including the capacity to dismiss executives, if reelected, a newspaper said on Friday.

The Financial Times said it had obtained draft legislation that showed the regulator, Bafin, would be given powers to fire managers and restructure major banks under threat of insolvency and without the agreement of shareholders.

The 28-page legislation, drafted by the economics minister, will not be adopted before next month's general election because of opposition from Merkel's Social Democratic Party coalition partner.

But it would become law if Merkel was reelected chancellor and she obtained enough votes to form a coalition with the Free Democratic party, as polls suggest is likely, the FT said.

German banks are heavily exposed to losses stemming from the international financial crisis and the collapse of the US market for high-risk, or subprime, mortgages.

-AFP