by Francesco Canepa and Tom Sims
FRANKFURT (Reuters) – As the banking sector experienced a sudden and rapid crisis in March, Deutsche Bank opted to temporarily bolster its liquidity reserves through large “swap” operations that caught the attention of the European Central Bank (ECB), several sources familiar with the matter told Reuters.
These short-term transactions, which lead to large variations in liquidity ratios, could alert regulators and analysts to the reliability of regulatory requirements introduced after the 2008 financial crisis.
Deutsche Bank’s financial package has caught the attention of the ECB, which oversees eurozone banks, which has raised the matter with the institution during routine discussions, the sources said.
The operations of Deutsche Bank to improve its balance sheet, if they constitute legitimate banking practices, nevertheless reveal the concern of the first German bank in the face of the turbulence which shook the banking sector in March, after the failure of American regional banks and the takeover in an emergency from Credit Suisse not UBS.
Asked about the transactions, a Deutsche Bank spokesperson said the group was “actively managing a cautious liquidity profile through a number of liquidity indicators”.
According to the sources, Deutsche Bank has swapped billions of euros in securities for cash and government bonds, which banks can use to bolster their core liquidity measures.
The transactions, mainly short-term “swap” agreements or repurchase transactions, helped Deutsche Bank raise its liquidity ratio (LCR) to 143% on March 31 from 137% on March 23, financial documents show. form the bank.
If Deutsche Bank had not carried out the transactions in question, its liquidity ratio would have remained above the regulatory requirement which sets it at 100%, they added, specifying that the level of liquidity of the German bank is not not a matter of concern.
An ECB spokesman declined to comment.
(Blandine Hénault for the French version, edited by Nicolas Delame)
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