Commerzbank Stops Depositing Money at ECB, CEO SaysShane Strowmatt
Commerzbank AG, Germany’s second-biggest bank, will no longer deposit surplus cash at the European Central Bank after policy makers reduced rates to negative, Chief Executive Officer Martin Blessing said.
While the measures the ECB announced last week will drive interest rates lower, they are an “experiment” and “we will see the results in a couple of months or a couple of quarters,” Blessing told Bloomberg on the sidelines of a conference in Frankfurt today.
President Mario Draghi cut the deposit rate to minus 0.1 percent on June 5, becoming the first chief of a major central bank to reduce main rates to negative. In a bid to get credit flowing, Draghi also opened a 400-billion-euro ($542 billion) liquidity channel tied to bank lending and officials will start work on an asset-purchase plan.
Banks may place excess cash with the ECB in the current account, where they are required to hold their minimum reserves, or in the deposit account. Banks must pay 0.1 percent interest on any cash exceeding the minimum reserve requirements.