When headlines scream about Eurozone financial woes, the message is universal: Everything stinks. Yet that is only part of the story. The missing piece is that Germany’s banks are going strong, as a New York Times article says. These institutions are “overwhelmed with deposits, and see continuing strong demand for loans to purchase homes.” The story looks at results of a survey by the European Central Bank, which asked central national banks about their lending and deposits for the second quarter.
Germany stood out as the only positive light among countries including strongholds Austria and the Netherlands, thanks in part to growth of corporate loans. However, these appear to be on the decline in Germany too, which some banks attributed to “corporate reluctance to make capital investments,” the story said.
As for home loans, demand in Germany also continued to grow as home prices are on the rise, again bucking the trend in Europe overall, where home sales are down on the fear of further price depreciation. The country can meet these loans, thanks to the trend of depositors shifting their cash from other European institutions to those in Germany, where the assumption is that the money will be safer.
By comparison, over the past 12 months, Germany’s central bank loans to the European Central Bank have doubled to 730 billion euros, compared with Italy, which had no debt to the ECB last year and now owes 275 billion euros, and Spain’s debt ballooned from 50 billion to 400 billion euros.
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