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Chart of the Decade – European Banks Fleeing German Banks Like Rats From A Sinking Ship

Smaller banks often deposit funds in bigger banks. The level of banks’ deposits at other banks is a reflection of their confidence in the system as a whole. The ECB measures and is kind enough to share with us the level of bank deposits in other banks in Europe, breaking the data down by country and the Eurozone as a whole.

Banks have been pulling their money out of other banks in Europe like rats deserting a sinking ship since 2012. Even the advent of QE in 2014 only slowed the stampede. European banks are still gettin’ out of Dodge.

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European Banks Deserting Other Banks- Click to enlarge

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Current data is as of month end April. Since June of 2012 when European interbank deposits peaked, the banks have pulled €1.28 trillion or 19.4% of their total deposits from other European banks. That’s an annual rate of decline of 5.2%. In the past year they have withdrawn €164 billion at an annual rate of decline of 2.8%. And the number is only that good because of a seasonal dead cat bounce in April.

The picture is even worse for Germany, with its biggest bank, Deutsche Bank on the ropes. European banks have pulled €243 billion, or 16.2% of their total deposits from German banks since the 2012 peak. That’s an annual rate of decline of 4.3%. But unlike in the rest of the European banking system, the withdrawals from German banks have accelerated in the past 13 months, falling by 8.9%. That’s more than triple the rate of decline from 2012-2015. And it’s more than triple the rate of decline from European banks in total.

Frankfurt, we have a problem.

European Banks Fleeing German Banks - Click to enlarge

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Read more about the situation of the European banking system in the Wall Street Examiner Pro Trader Banking Liquidity Report to be posted Saturday morning. Read these reports and our proprietary Macro Liquidity Reports risk free for 90 days.

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Lee Adler

I’ve been publishing The Wall Street Examiner and its predecessor since October 2000. I also publish LiquidityTrader.com, and was lead analyst for Sure Money Investor. I developed David Stockman's Contra Corner for Mr. Stockman. I’ve had a wide variety of finance related jobs since 1972, including a stint on Wall Street in both analytical and sales capacities. Prior to starting the Wall Street Examiner I worked as a commercial real estate appraiser in Florida for 15 years. I also worked in the residential mortgage and real estate businesses in parts of the 1970s and 80s. I have been charting stocks and markets and doing analytical work since I was a teenager. My perspective is not of the Ivory Tower. It is from having my boots on the ground and in the trenches of the industries that I analyze and write about today. 

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