German spending plans are dangerous without cost cuts, banker warns

FRANKFURT (Reuters) - Plans in Germany for big increases in infrastructure and defence spending are going too far and pose a danger to public finances, the president of the nation's cooperative banks warned on Monday.

Last week, the parties hoping to form Germany's next government agreed to create a 500-billion-euro infrastructure fund and overhaul borrowing rules, a tectonic spending shift that fuelled hopes of reviving Europe's largest economy.

But Marija Kolak, president of the National Association of German Cooperative Banks, warned that the plans are "overshooting the mark".

"The massive increase in debt without at the same time talking about necessary savings and far-reaching structural reforms is extremely dangerous," she said.

The criticism echoes statements from other top German bankers last week.

"This jeopardizes the long-term stability of public finances at the expense of future generations," she added.

Cooperative banks are a pillar of the financial sector in Germany. The national association encompasses more than 650 lenders with 1.2 trillion euros ($1.30 trillion) in assets.

($1 = 0.9245 euros)

(Reporting by Tom Sims, Editing by Miranda Murray)

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