Collapse: We Now Know the Timeline – 40 days +/-
Superstation95.com
May 14, 2016
Germany’s (almost bankrupt) Deutsch Bank is suddenly offering five percent (5%) interest to folks who deposit 10,000-50,000 Euros for a minimum 90 days. But this offer is only good until June 24, about 40 days from now. Is this a last gasp to lure people into the banking system before it fails? Some think that’s exactly what it is, especially given some new language included in the account contract “savers at risk of losing deposit . . .”
One of the reasons why central banks around the globe have flooded the financial system with trillions in excess reserves is to make sure that banks no longer have to rely on potentially fleeting short term deposits (and is also why negative interest rates have become the norm in so many part of the world, that $10 trillion in bills and bonds now trade with a negative yield). As a result of years of such central bank policy, banks – mostly in Europe – no longer need to compete with each other for deposits: after all why offer tempting deposit rates in an age of NIRP (Negative Interest Rate Policy) when banks can get all the liquidity they need straight from the ECB and in some cases even get paid on it.
Furthermore, the whole point of NIRP is to slowly unleash negative, not positive, interest rates in order to discourage savings.
Which is why we were surprised to find that in a promotional offer by Europe’s biggest, and by many accounts most insolvent, bank, Germany’s Deutsche Bank is not only not rushing to penalize depositors, on the contrary it is offering its Belgian clients a 5% gross return for new €10,000 – €50,000 deposits if this money is locked up for the next three months. The offer is only valid for the next 40 days, until June 24.
Why the offer? All else equal it would appear as if Deutsche Bank suddenly needs liquidity quite urgently (but only enough per person so that in a worst case scenario the amount is fully insured by the government) with a 3 month lock up; so urgently it is willing to pay an interest which is higher than on some European junk bonds.
It begs the question: how is it that DB can’t get a far, far cheaper deal in the bond market, or using short-term unsecured funds? Perhaps no one who understands the financial mess that the bank is in, wants to lend them money?
The Rest…HERE
