Thoughts from a friend. This is speculation, there is no confirmation of a bank run. No position.
Look at the first graph: The double red line – the short sovereign bond – that interest rate drops like a rock. The fat red line (tomorrow/next) drops with it: That means it is an isolated fenomenon to ONE bank. Wich?
Look at the second graph: The fat green line – deposits from banks into the National Bank – swoops up with 50 billion DKK. Short term cash in that amount can only be Danske Bank – nobody is that big.
When? Look at the orange line (first graph), that stops on friday the 25th of November – tre months secured interbank loans – the unsecured follows the 5 year sovereígn bond nicely.
Well, there is lots an lots of cash out there – they just wont lend it to Danske Bank!
2) National Banken drops interest rates on 4th of november (deposits 0,35% and lending 0,25%) and again on 9th December (deposits 0,25% and lending 0,4%). Thishas something to do with ECB disturbance and refinancing of the housing loans – but not all of it: We are talking all together (minus 0,55% on deposits and 0,65% on loan).
3) I saw somewhere (now I can’t find it) that consumption is up – measured on ATM-mashines before X-mas. But at the same time the shops reported that Christmas presents will be smaller this year (the discount versions). Look one thing is certain for the last year: Consumption is down.
That Danske Bank had lowered interest on deposits to 0% shure helped a lot.
4) The National Bank issued a press release on 8th December stating that Danish BankS were not exposed to defaulting european nations – why say that – though it is true – if it were not for apprehension, that suspicion of such exposure would increase apprehension? The test is back in October.
On the same day they also issued a press statement announcing new “instruments” for lending to banks in distress:
Med henblik på midlertidigt at øge penge- og realkreditinstitutternes adgang til længere finansiering indfører Nationalbanken mulighed for at optage lån med 3 års løbetid. Udlånene foretages mod sikker-hed i Nationalbankens sikkerhedsgrundlag. Renten på den 3-årige ud-lånsfacilitet vil være variabel og følge Nationalbankens 7-dages pen-gepolitiske udlånsrente. De nye udlån tilbydes ved siden af National-bankens udlån med løbetider på 7 dage og 6 måneder. Nationalban-ken vil indbyde penge- og realkreditinstitutterne til en drøftelse af ordningens tilrettelæggelse.
The National Bank introduce -in order to temporarely augment the bank- and realestate finance institutes access to longer financing – the possibility to loans of 3 years maturity. The loans will be against security according to Nationalbankens collateral. The interest rate on the 3 year credit will be variable and follow the Nationalbanks 7-day moneypolitical lendingrate. The new loans are offered in addition to the loans of 7 days and the ones at 6 months from the Nationalbank. The Nationalbank will invite the money- and buildingsocietyinstitutes to a discussion of the practical details.
You damned well do not announce a major change in policy – and say: We don’t quite know how to go about it! The National Bank issues directives prepared in advance. If not it is because all Hell has broken loose!
Som omtalt ved Finansrådets årsmøde 5. december 2011 supplerer Na-tionalbanken tillige sine instrumenter med likviditetsjusterende ind- og udlånsoperationer i kroner for at understøtte fastkurspolitikken. Operationerne kan anvendes til at justere likviditetssituationen i pen-gemarkedet på tidspunkter og i det omfang, der er behov for. Renten og løbetiden på operationerne vil afspejle markedsforholdene.
As mentioned at the annual meeting of Finansrådet (i.e. the banks organisation) on 5th of December 2011: The National Bank supplements its instruments with liquidityadjusting lending- and borrowingoperations in DKK to support the policy of linking the DKK to the Euro. The Operations can be used to adjust the liquiditysituation in the moneymarket at times and to the extend it is needed. Interest and maturity of the operations will reflect the market situation.
We will do whatever it takes.