Strong Demand for Dollar Liquidity in the Shadow of Deutsche Bank

The European Central Bank has been providing dollar liquidity in the European financial market since the collapse of Lehman Brothers. Operations have been at relatively low levels in recent years, but this week 12 banks requested $6.3 billion in liquidity. The total amount of dollars requested is the highest in four years, and the number of bidders has also surged, reports Bloomberg.

In the background, the German newspaper Die Zeit reported that Merkel is preparing a ‘rescue’ for Germany’s largest bank, Deutsche Bank AG, which is facing a series of regulatory fines in the United States.

Deutsche Bank is closing nearly 200 branches in Germany

– They are preparing for a contingency that could shake the country and which was completely unimaginable just a few weeks ago – wrote Die Zeit, whose claims were immediately dismissed by the German government, while the CEO of Deutsche Bank embarked on what turned out to be an unsuccessful ‘damage control’. Yesterday, news broke that part of the funds in the derivatives market withdrew excess cash and reduced their positions in the bank, resulting in today’s drop in the value of its shares to a tragic 10 euros.

Deutsche Bank and Credit Suisse removed from the STOXX Europe 50 index

– After several days of relief, the markets are again in the red, while Deutsche Bank continues to position itself as the primary concern for investors. Last night’s report from Bloomberg that ten hedge funds reduced their exposure to the German financial firm triggered the latest round of heavy losses. Deutsche Bank’s shares fell by 9 percent after the bell. This drop saw the bank’s shares plunge below 10 euros, marking the worst price in 30 years – summarized today’s movements in European markets Conner Campbell from SpreadEx.

An ECB spokesperson declined to comment on this week’s demand, which according to Bloomberg could suggest a broader liquidity problem for European banks.