German financial services giant Deutsche Bank AG (DB) took between 5 billion and 10 billion euros in loans, or between $6.63 billion to $13.27 billion, from the European Central Bank's emergency lending program last week, according to media reports on Thursday.
Deutsche Bank's outgoing chief executive Josef Ackermann is said to have had reservations about taking any funds from the central bank's lending program due to fears about stigma attached to the bank receiving state aid, but was eventually persuaded to participate.
Ackermann was reportedly not keen on tapping the ECB's lending program as he noted that Deutsche Bank's primary attraction to clients was that the bank had never taken any money from the government.
Last week, the ECB pumped in huge amount of funds for its long term refinancing operation or LTRO to help European banks and limit the threat of a credit crunch.
The second ECB three-year program lending program made available to 800 banks a record 529.5 billion euros, or $712.4 billion, in an effort to alleviate capital concerns. Economists expected funding between 470 billion to 500 billion euros.
The cheap loans are offered to banks so as to restrain them from curbing loans to businesses and consumers as well as to ease fears of banks running out of money. Thus far, instead of lending, banks were parking additional funds at the central bank.
While economists expect the operation to provide further vital support for the eurozone's beleaguered banking sector, they are apprehensive if it would alter the underlying outlook for the wider economy or bring an end to the peripheral debt crisis.
In the first offering of 3-year loans in December 2011, the ECB shelled out 489.19 billion euros at 1 percent interest, which helped cash-strapped lenders to refinance maturing bonds.
DB closed Thursday's trading at $47.17, up $2.27 or 5.06 percent on a volume of 2.72 million shares.
by RTT Staff Writer
For comments and feedback: email@example.com