Deutsche Bank doesn’t want to lose rep by accepting cheap ECB money

Date: Friday 03 Feb 2012

Even though the European Central Bank (ECB) is preparing a second round of “cheap money” for banks to combat the credit crisis, Deutsche Bank is reluctant to accept the offer as it fears losing its reputation.

The ECB is gearing up for a second auction in February of loans to European banks. While the first one received requests for €489bn, some analysts think that financial institutions will be less “shy” this time around and could ask for up to €1trln. These loans could be attractive to banks as they carry a low interest rate of only 1%.

However, there are those that fear requesting this money would be considered a kind of weakness, an indication to the market that the financial institution could have liquidity problems.

Such is the case of Deutsche Bank. Its Chief Executive Officer Josef Ackermann indicated yesterday that his company is against taking this money in fear that it could damage the bank’s reputation: “the fact that we have never taken any money from the government has made us, from a reputational point of view, so attractive to so many clients in the world that we would be very reluctant to give that up,” he said.

Deutsche Bank was trading down 0.07% at €33.87 in mid-morning trade in Frankfurt.

JM

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