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Banks 'stashing money in fear of meltdown'

The Local · 19 Jan 2012, 12:44

Published: 19 Jan 2012 12:44 GMT+01:00

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How banks store their assets in the ECB is generally seen as an indicator of a country’s financial health, he said; the more money put into the fund the more scared banks are of meltdown.

Fitschen said that the current slump “may last several more years” and that banks were more fearful of economic collapse than during the peak of the 2008 recession.

German banks have stashed €528 billion in the ECB, more than during the height of the recession, the Westdeutsche Allgemeine Zeitung (WAZ) reported on Thursday.

“Europe is the sick man of the global economy,” Fitschen told the paper, adding that international confidence in the EU’s economy was waning and overseas investors were pulling out.

“The fear indicator is higher than in was in 2008,” he said. “Something is not right, trust is disappearing.”

Deutsche Bank board member Fitschen and investment banker Anshu Jain will take the reins of Germany’s biggest bank from current CEO Josef Ackermann in May.

Fitschen then said the German involvement in reducing Greece’s debts was to blame for an 8 percent slump in Germany’s economy. “If this situation continues, it will end in disaster,” he said.

Commerzbank, Germany’s second biggest bank said on Thursday it had approved a plan that would allow it to solve its financial problems without state aid.

This announcement comes following widespread doubt in the bank from analysts and a bail out from the government in 2009. The European Banking Authority said in December that German banks needed to raise €13.1 billion to withstand future financial shocks, with Commerzbank requiring €5.3 billion.

But the bank said it had reduced this to €3.0 billion by the end of 2011. They also expect to have €1.0 billion more than necessary by June 30 due to a reduction in risky investments and saving up profits from the fourth quarter of last year.

This will only be possible, however, if the Germany economy does not deteriorate further, the bank said.

Story continues below…

Investors celebrated the news, and shares in Commerzbank soared on Thursday during Frankfurt stock exchange late morning trading.

The Local/DPA/AFP/jcw

The Local (news@thelocal.de)

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Your comments about this article

15:21 January 19, 2012 by freechoice

James 5:3 (NIV)

3 Your gold and silver are corroded. Their corrosion will testify against you and eat your flesh like fire. You have hoarded wealth in the last days.
16:20 January 19, 2012 by storymann
Commerzbank and other banking institutions have been unloading sovereign bonds at a loss. They are trying to boost capital for the inevitable meltdown.
15:08 January 20, 2012 by elboertjie
There is already way too much fiat money created over the last 4 decades and now their doing this exponentially. According to the mathematical formula for compounding, we have now passed the point of no return with regards to being able to create enough new money to pay of existing debt, because with new money, there comes even more debt.

So, either officially default, or repudiate the debt through inflation (money printing). Either way, when the music stops, too many people will realise that there aren't enough chairs to sit on...
21:45 January 22, 2012 by genedoc60
Hording money instead of loaning it, When will the banks learn. If you wish to correct the future melt down you have to stimulate the economy now. Get small and medium companys up and running again. When they can borrow money to expand their companys they will hire more people, more people with jobs will equate into consumer spending. This will stimulate more jobs and continue to do so. Sitting on the cash is bordering on economic stupidity and foolishness

in the highest degree.
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