Liquidity Problems? Deutsche Bank Offers 5% Yields If Depositors Lock Up Their Money For Three Months

Tyler Durden's picture

One of the reasons why central banks around the globe have flooded the financial system with trillions in excess reserves is to make sure that banks no longer have to rely on potentially fleeting short term deposits (and is also why negative interest rates have become the norm in so many part of the world, that $10 trillion in bills and bonds now trade with a negative yield). As a result of years of such central bank policy, banks - mostly in Europe - no longer need to compete with each other for deposits: after all why offer tempting deposit rates in an age of NIRP when banks can get all the liquidity they need straight from the ECB and in some cases even get paid on it.

Furthermore, the whole point of NIRP is to slowly unleash negative, not positive, interest rates in order to discourage savings.

Which is why we were surprised to find that in a promotional offer by Europe's biggest, and by many accounts most insolvent, bank, Germany's Deutsche Bank is not only not rushing to penalize depositors, on the contrary it is offering its Belgian clients a 5% gross return for new €10,000 - €50,000 deposits if this money is locked up for the next three months. The offer is only valid for the next 40 days, until June 24.

Why the offer? All else equal it would appear as if Deutsche Bank suddenly needs liquidity quite urgently (but only enough per person so that in a worst case scenario the amount is fully insured by the government) with a 3 month lock up; so urgently it is willing to pay sn interest which is higher than on some European junk bonds.

It begs the question: how is it that DB can't get a far, far cheaper deal in the bond market, or using short-term unsecured funds?

Here is Deutsche Bank's offer to Belgian clients to open a DB Invest Plus account (google translated):

Open a term account and get 5% gross annual Deutsche Bank will always offer the best offer on the market. Therefore, you can now 3 months 5% gross annualized receive when you open a DB Invest Plus deposit account.

 

An excellent opportunity to increase your returns

 

Deutsche Bank, you may be demanding for money. Proof? Stop by one of our Financial Centers. You now get a clear 3 months 5% gross per annum for new amounts from 10,000 to 50,000 euros, if you go for June 24, 2016 opens a DB Invest Plus deposit account (subject to early closing).

 

Please note that this promotion is only valid for the injection of fresh money, ie amounts previously never been in an account with Deutsche Bank AG Branch Brussels were (between 10,000 and 50,000 euros per person and per family and only at the Financial Centers Deutsche Bank AG Branch Brussels. offer reserved for Belgian residents).

 

5% in all simplicity

 

You receive a guaranteed rate of 5% gross per annum for 3 months for each new deposit of 10,000 to 50,000.

 

5% and a maximum efficiency

 

After deduction of withholding tax of 27% 1 provides the DB Invest Plus deposit account (a deposit account under Belgian law) a net return of 3.65% per annum for 3 months (fees apply to physical persons residing in Belgium).

 

 

5% in any flexibility

 

This account is designed for people who do not need immediate or within three months of their money and are looking for a fixed interest returns. To be clear: after 3 months will release your money and you can do whatever you want.

Which is certainly a great guaranteed return in this age of ZIRP/NIRP day and age; however the question is: why does Deutsche Bank need this money so urgently, and especially over the next three months.

And while we were pondering this, we noticed a new addition to the generic risk factors boilerplate language, where in addition to the usual stuff, we now see a warning about the infamous "bail in."

In case of bankruptcy or risk of bankruptcy of financial institution, the saver is at risk of losing their savings or may be subject to a reduction / conversion into shares (bail-in) of the amount of the claim that he has the financial setting on top of the amount covered by the double German guarantee scheme for deposits.

We wonder if DB will be alone in going against the ECB's grain with such scandalously high rates, or if this turns out to be a systemic issue and suddenly every other bank will likewise rush to attract deposits at a time when the ECB would like nothing more than to have a minus sign in front of the 5%.

Finally, we must admit that we are especially amused by the google translator's twisted humor when it comes to captioning the picture this especially enticing offer appeared on.

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knukles's picture

From the Land of Negative Interest Rates?
Something's terribly wrong with this offer.
Now, they want to do this at any US branch FDIC insured, I could help out.

KnuckleDragger-X's picture

DB wants to screw Belgians in an emergency, seems appropriate......

zeropain's picture

So the fed doesnt control rates after all?

0b1knob's picture

"Blow your projects to life"?????

Google translate epic fail.   I wonder what the orignal German really meant?

petar's picture

They just inreased interests in one of the EZ countries.

RAT005's picture

It seems pretty similar to crowd funding.  What could go wrong? 

Never One Roach's picture

I'll give anyone 28% if they lock up their money with ME for 1 year  ...  or moar.

 

he he he he ......

joego1's picture

I think it means you get a free Heidi blow up fuck doll with the deal.

12cmKAPJ's picture

Actually the ad is in flemish, not german.

XXL66's picture

It is dutch, originally it is "Blaas uw projecten leven in" would be translated litary "Blow life into your projects" i would translate to "Bring your projects to life"

It is kinda translated funny, like "blow that bubble up".

DB is deperate i noticed already earlier because they are running add's everywhere, TV , twitter, papers...

BUT: this add actually works, Belgian savers are desperate for yields, and they are storming to DB if you read the belgian savers website "spaargids"

They don't have a clue, i personally reduced my personal and business accounts to basicly zero.

I'm buying heavy coins.

 

 

 

Not My Real Name's picture

If Deutchebank stays solvent during the 3-month period: "Bring your projects to life!"

If Deutchebank melts down during the 3-month period: "Blow your projects to hell."

Bananamerican's picture

Fuck. The last bank to do that for me was IndyMac...I shit you not. (I pulled my money out of Indy because of Denninger)

OzFan's picture

Nice work mate....that's why it pays to listen to these guys like Denninger..

Poor sheeple who lost their shirts on that one....fcking bankers

Bananamerican's picture

Doucheinger ended up banning me 3 times....that's how I found Zerohedge ;)

haven't gotten bounced here yet.....for some reason

mkkby's picture

Only banned 2x... guess I'm still a newbie.  Each time for things HE IMAGINED I was saying.  The guy's smart, but a real head case.

California Nightmares's picture

Out here in Cal, Chase, Capital One, and USBank all pay people to start checking and savings counts. I've taken both offers of all three. Can terminate accounts after one year and keep the money. But now I'm wondering. They say Chase is insolvent.

HRH of Aquitaine's picture

90 days from June 24th is September 24th. Hmmmm.

Are people really stupid enough to do this?

This reminds me of CD rates in the 1980s.

The Wizard's picture

This is like a store running a fire sale to unload inventory in order to get their balance sheet in order. It appears someone is concerned abouth the DB balance sheet and their derivative exposure.

ThirteenthFloor's picture

+1 nink. "Come on in guys, the water's warm".

Bumpo's picture

Because in 3 Months the Bank will be officially insolvent.

BeanusCountus's picture

Almost criminal. You can earn 1.25% on your deposit in next 3 months. And the risk is that you could lose ??% in a bail in. Who would do this for 1.25%? Make DB go to a payday loan company or a pawn shop.

RAT005's picture

I missed the detail of is it 5% for 1 year,  or 1.25% for 3 months? 

Wile-E-Coyote's picture

The 24th of June is one day after the BREXIT vote in the UK.

0b1knob's picture

I keep getting offers from Chase promising a $200 bonus if I open or transfer a checking account of at least $10,000 and maintain that balance for 90 days.

That is effectively a 2% return for 90 days or 8% on an annualized basis.

I've gotten postcards with that offer at least a dozen times over the last few years.

 

buzzkillb's picture

Was it too much to have a post about Chase ATM's now being down for 24 hours in the US? Since this isn't in the news not many people must use cash....

Yen Cross's picture

  Insured??? lol, that's a good one.  Tell that to all those destitute Cypriots.

mkkby's picture

Yen, the cyprus bail in was only for accounts over 100k or 200k, as I recall (easy enough to look up). 

If you can get a good return for an amount under the insurance limits, you should jump on it.

But then, you damn well know that.  I assume you are joking, but dumb asses out there won't.

JustUsChickensHere's picture

Everyone seems to make the mistake of thinking that.... <100k so it does not affect me... wrong.

Many, many businesses use over 100k as their ordinary float - for wages etc - and property settlements usually cause temporary balances of >100k.

So - all intransit real estate acivitity is stolen, and a vast number of business get trashed. Goodbye to any pleb with a job at one of those busineses !

Wile-E-Coyote's picture

The end is near! Be lucky. 

Professor Fate's picture

So Deutsche gets caught red-handed and admits to manipulating the price of precious metals. It agrees to squeal on everyone else involved.  At the same time, Smellin' Yellin calls not one but two emergency meetings at the Fed.  Then she barges in on Obozo in an unscheduled meeting to give him some not so savory news of some kind.  Unfortunately,he's too busy sniffing an old Beyonce thong to care.  Now, Deutsche is scrambling for cash. This is beginning to smell like a major Deutsche derivatives event.  

Fate the Magnificent
"Push the Button, Max" 

Twox2's picture

I seem to recall Washington Mutual doing something very similar right before its collapse in 2008.  Friends scoffed when I worried the offer was just a little too good...

mkkby's picture

And if you discouraged them, you gave them very bad advice. 

I have deposited frn's in 2 banks that closed.  In each case, insurance paid off in full.  You don't ever lose access to your money, either.  Keep taking the best rate offers, just keep your balance below 250k in the US.

Now if you told them to avoid the STOCK, then good job.  A friend of mine bought wamu stock a week before they failed.  He thought the $2 price was enticing.  Took a 100% loss IN ONE WEEK :)

joego1's picture

Didn't JP Morgan do a deal with Obama to insure all of their derivatives. Let me see, should we pay Grandma or Morgan first?

Zero_Ledge's picture

I've taken advantage of numerous similar offers from U.S. banks over the last several years: Citibank, Chase, JPM.  Typically, you open a new savings account and get an interest bonus upfront, but have to leave the money there for 3-6 months.  Anuualized, the bonus works out to about 4%.  More recently, the bonuses are getting smaller.  Their marketing geniuses finally figured out that people like me have been playing them for years.

 

GRDguy's picture

One last grab before the bail-ins?  

debtor of last resort's picture

-Icesave 2.0.
-Merkel Antoinette 2.0

the grateful unemployed's picture

now they're marketing like my cable company, $25 internet* (for 12 months with a two year contract) banks used to give away toasters and with the interest they pay the toaster is a better deal. i don't believe that these deposits are categorized as reserves, even if they are locked up for a certain amount of time but if the banks are out soliticing for cash to bolster their reserves things are really bad.

SHRAGS's picture

We're all out of toasters at the moment, perhaps a Spiderman Towel?

JLM's picture

Only 3 months until all hell breaks loose.  Hmmm ....

JamesBond's picture

Preparing for the US election in advance.

 

jb

CHoward's picture

I'm not paranoid (generally) but this 5% interest rate for just 3 months having your money tied up sets off all kinds of alarm bells with me.  I'd say LOOK OUT FOR the bank being locked down and bail-ins in 3 months exactly!! 

swmnguy's picture

89 days from June 24.  So September 21.

joego1's picture

Very close to election day. I think that September will be blame it all on Trump month. I see it now, Saudi's and Chinese use Trump as a scape goat to dump all treasuries and financial system locks up.

Chuckster's picture

Good to see you posting!  When does this shit show they have kept running actually going to end?  Some of these people did vote for Oby.  That's enough to make a man sick.  The Pope was right.  If you think you know someone that won't steal from you....you simply haven't known them long enough.  "The wall Donald....the wall!"  It appears all of South America is going under and the people are going to come north by the millions.  No government can withstand the onslaught.  Donald is our cleanest dirty shirt but he is the only hope we have at this point.  Oby didn't invite Bernie to the white house for a social visit.  There are all kinds of things brewing.  If Oby can't become king and Hillary passes....he must be lining up Bernie.

3Wishes's picture

We now have 3 months to get right with a God