HomeEconomyExclusive - Deutsche Bank taps blockbuster deal to raise cash amid March... Economy Exclusive – Deutsche Bank taps blockbuster deal to raise cash amid March turmoil – sources By hossam a May 26, 2023 0 24 views Share FacebookTwitterPinterestWhatsApp DBKGn +0.% Add/Remove from Watchlist Join the watch list Add Job Location successfully added to: Please name your portfolio type: purchase Sell date: quantity: price Point value: Leverage: 1:1 1: 1: 1: 1: 1:31 1: 50 1: 130 1: 25 Committee: CREATE NEW WATCHLIST CREATE 2008200 2008 2019 Create a new holding portfolio Add Create 1000 + add another position to close via Francesco Canepa and Tom Sims FRANKFURT (Reuters) – As banks came under mounting pressure in March, 400143 Deutsche Bank (ETR: 400 DBKGn ) Using large transactions to temporarily boost its cash buffers in a way that has drawn scrutiny from European regulators, two sources familiar with the situation said. Worried. Deutsche Bank has swapped billions of euros of securities for cash and government bonds, which it counts in its liquidity coverage ratio, sources told Reuters. (LCR). This is to determine the extent to which banks have access to readily available cash to fund outflows such as withdrawals by depositors. While legitimate banking, the move underscores the broader turmoil in Deutsche Bank’s response. Having a lot of cash would have reassured investors and customers after deposit runs at Credit Suisse and many U.S. banks. The deals caught the attention of the European Central Bank (ECB) supervisors discussed them in a routine exchange, the sources said. Challenged to Germany’s largest bank. Even without a deal, Deutsche Bank would be far ahead of % LCR Regulatory Requirements and Exceeded own target, the source said, adding that its liquidity was not an issue. The important thing for the ECB, they say, is to determine how much liquidity the bank has at any given moment, and what it plans to do when it receives How much liquidity you have in the next few months. The problem is that liquidity, if not updated for short-term trades, can disappear, clouding the long-term view. “These things can change quickly, but as a supervisor, I would be concerned if they do this at the end of the quarter just to look more Well, I’d like to look into it,” said Thorsten Beck, dean of the Florence School of Banking and Finance and co-chair of the advisory scientific board of the European Systemic Risk Council. Deutsche Bank, which used such deals to improve its liquidity position at the height of recent banking turmoil, has not previously been reported and its conversations with regulators are confidential. practice is not uncommon among big banks, but the ECB in 130 Stress testing as a technique to make banks look stronger. The Deutsche Bank deal boosted its LCR in March, helping CEO Christian Sewing in his April Q1 presentation Data to analysts praised the bank’s “resilience” and “solid fundamentals”. Deutsche “actively manages to maintain a conservative liquidity position across a number of liquidity metrics,” a spokesman told Reuters. Its liquidity levels reflected a “prudent turn in an uncertain market environment,” while the increase in late March was “primarily driven by seasonality,” they added. A spokesman for the ECB declined to comment. “Strong footing” March was a stressful time for banks. Deutsche Bank customers began withdrawing their deposits days after Switzerland plotted a rescue of Credit Suisse, its executives later said, while the bank’s shares fell as much as % one day. One concern in the market at the time was whether banks had enough cash on hand to meet the needs of depositors. Euro zone banks are required to have an LCR of at least 11%, which means they have enough liquid assets to cover a month of outflows. The Deutsche Bank deal helped boost its LCR to 30% March, its report released in April showed. The figure stands at 30% on the move , it was In a filing, the report said the move was aimed at calming the market s. However, after Deutsche Bank said in February that it would lower the LCR ratio to its 11% target year. Such short-term fixes that lead to large swings in the LCR could raise new questions from regulators and analysts about the reliability of the requirements introduced after the global financial crisis crisis137. Credit Suisse says its LCR is approximately 50%, calculated using a three-month average, was announced by Swiss authorities less than a week later Couldn’t survive and got taken over by UBS. If there’s one thing the ECB has learned from the swift collapse of Credit Suisse, it’s that, one source said. LCR is an unreliable indicator because deposits can disappear overnight. this352 ECB Liquidity The stress test found that many banks were using collateral swaps “designed to increase the quantity (or) quality” of the LCR buffer. One weakness the ECB found at the time was that some reports said liquidity had “significantly” dropped a day later , which may be a result of the “optimize” strategy. It also said the strategy had become a source of “interbank linkages”, which the regulator viewed as a source of systemic risk in the industry. Hans-Peter Burghof, Professor of Banking and Finance, University of Hohenheim, Germany The debate over the usefulness of liquidity metrics has been going on for decades, said. “Trust cannot be measured in numbers,” he said. “If I were a regulator, I’d hate it,” Burghof added, adding that banks use swaps and other deals to boost LCRs, among other things. 137 Share FacebookTwitterPinterestWhatsApp Previous article'The Marvelous Mrs. Maisel' Creator, Luke Kirby Unpacks 'Hurt' Lenny Bruce Ending Scene: 'You Really Can't Go Backwards'Next articleDr. Stone: The New World ‒ Episode 8 hossam a RELATED ARTICLES Economy BOJ's Ueda says shift in corporate pricing, inflation biased to the upside June 9, 2023 Economy Australian banks could face tougher regulation if they don't comply with home loan guidelines June 9, 2023 Economy China's factory-gate deflation deepens in May, consumer inflation picks up June 9, 2023 LEAVE A REPLY Cancel reply Comment: Please enter your comment! 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