Bloomberg News

Deutsche Bank Said to Have Tapped Second Round of ECB Lending

March 09, 2012

Deutsche Bank AG (DBK) tapped European Central Bank three-year loans last month after Chief Executive Officer Josef Ackermann shunned the funds in December on concern it could damage the lender’s reputation, according to a person with knowledge of the matter.

Germany’s largest bank borrowed the funds after deeming it beneficial, said the person, who asked to remain anonymous as the information isn’t public. Deutsche Bank borrowed 5 billion euros ($6.6 billion) to 10 billion euros, the Wall Street Journal reported earlier, citing an unidentified person familiar with the matter.

The ECB awarded banks more than 1 trillion euros in tenders in December and February to keep credit flowing to the economy as Europe’s debt crisis made institutions wary of each other and drove up borrowing costs. Ackermann said Feb. 3 that he would be “reluctant” to give up Frankfurt-based Deutsche Bank’s image as a lender that never took public funds in times of economic crisis.

Christian Streckert, a Deutsche Bank spokesman, referred to comments Ackermann made Feb. 3, when he said that while the firm doesn’t need to borrow from the ECB, it might if the terms were “very attractive from an economic point of view.”

The ECB lent 800 financial institutions a record 529.5 billion euros in three-year cash on Feb. 29, according to the central bank. In the ECB’s first three-year operation in December, 523 banks borrowed 489 billion euros.

The three-year funds cost the average of the ECB’s benchmark interest rate -- currently at a record-low 1 percent - - over the period of the loans and banks have the option of repaying them after a year. To encourage borrowing, the ECB increased the pool of collateral banks can use to obtain them.

To contact the reporter on this story: Nicholas Comfort in Frankfurt at ncomfort1@bloomberg.net

To contact the editor responsible for this story: Frank Connelly at fconnelly@bloomberg.net


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