FILE PHOTO: A car drives out of the headquarters of Germany’s federal bank Deutsche Bundesbank Frankfurt, February 4, 2013. REUTERS/Kai Pfaffenbach/File Photo
By Balazs Koranyi and Bart H. Meijer
FRANKFURT/AMSTERDAM (Reuters) – The German and Dutch central banks on Friday posted multi-billion euro losses for 2023 and predicted more financial pain ahead, suggesting that they are unlikely to pay dividends into state coffers for years to come.
FILE PHOTO: A sign is seen outside the headquarters Germany’s federal bank Deutsche Bundesbank in Frankfurt, February 4, 2013. REUTERS/Kai Pfaffenbach/File Photo
The European Central Bank and some of its largest national affiliates are generating large losses, depleting provisions and much of their equity, as sharply higher interest rates force them to pay out billion in interest to commercial banks.
The Bundesbank said it lost 21.6 billion euros ($23.36 billion) last year, wiping out nearly all of its provisions while its Dutch counterpart lost 3.5 billion euros, both broadly in line with expectations.
“The financial burdens are likely to persist for several years,” Bundesbank President Joachim Nagel said. “We … expect them to be considerable again for the current year.”
The Bundesbank said the loss in 2023 had wiped out nearly all of its provisions and that a 2.4 billion euro portion of this loss would be covered from reserves.
In 2024 the German loss will exceed the remaining 0.7 billion euro reserves, so the Bundesbank will be forced to carry the losses forward, setting them aside to be offset by future profits.
“We therefore do not expect to be able to distribute any profit for a longer period of time,” Nagel added.
The Dutch central bank, meanwhile, said that its buffers should be big enough to cover future losses and a recapitalisation by the government is not being considered.
“Once we have sufficiently restored our buffers by retaining profits, we will resume dividend distributions to the Dutch State,” the central bank said.
Most of the losses are as a result of the ECB’s decade long-stimulus programme from an era of excessively low inflation in the pre-pandemic era.
The ECB printed trillions of euros worth of cash to stimulate growth and most of that excess liquidity, 3.5 trillion euros, is still sloshing around the financial system.
The European central bank must now pay lenders a 4% deposit rate when this is deposited back at the ECB, while the assets its bought, mostly government debt, yield much less.
Losses do not curtail a central bank’s ability to function as unlike a commercial lender, it can carry on with negative equity. But losses do limit the ability to pay dividends into state budgets, a steady source of income for governments in the past, and opens a central bank to criticism.
Morgan Stanley estimates that losses across the ECB and the national central banks, commonly called the Eurosystem, will rise further this year before a drop in 2025.
“We estimate that the Eurosystem will face losses of 56.6 billion euros in 2023, 62.2 billion euros in 2024 and 12.3 billion euros in 2025,” it said.
($1 = 0.9246 euros)
(Reporting by Balazs Koranyi and Bart Meijer; Editing by Jason Neely and Alexander Smith)
News Related
-
, Nov. 28 — One of the most anticipated Android releases for 2023 has been the Google Pixel 8 lineup. The Pixel series is often considered the best of what Android has to offer since it brings the true stock Android experience. The Pixel 8 Pro was globally released on ...
See Details:
Google Pixel 8 Pro Review: Is this the best Android phone of 2023?
-
A blank space or an (NR) indicates no readings received. An (e) indicates that the water level has been estimated. An (w) indicates that the conditions were very windy, resulting in an inaccurate reading. Omatjenne Dam does not have abstraction facilities. The dam contents are according to the latest dam ...
See Details:
Namwater Dam Bulletin on Monday 27 November 2023
-
Dhaka, Nov. 27 — Nobel laureate Dr Muhammad Yunus has been appointed chair of the international advisory board of Moscow’s Financial University (under the government of the Russian Federation). On November 23, he joined a high-level strategic meeting with Prof Stanislav Prokofiev, Rector of the Financial University, and his colleagues. ...
See Details:
Dr Yunus appointed chair of Moscow Financial University's international advisory board
-
In a pivotal encounter at the International Cricket Council (ICC) Twenty20 World Cup Africa Final Monday, the Cricket Cranes faced Nigeria, knowing that a win could significantly boost their chances of securing one of the coveted tickets to the 2024 T20 World Cup in West Indies and the USA.Nigeria won ...
See Details:
Victory over Nigeria puts Uganda on the brink
-
Capture 1 The Bank Ghana (BoG) Monetary Policy Committee (MPC) has maintained the key policy rate at 30 percent, while introducing additional liquidity management measures to address excess liquidity and reinforce the disinflation process. Announcing the committee’s decision on Monday following its 115th meeting, BoG Governor Dr. Ernest Addison said ...
See Details:
BoG holds policy rate at 30%, tightens liquidity measures
-
Renita Holmes has been displaced four times in the past three years by rising rents With sea levels rising around the globe, Miami, in the US state of Florida, is facing an urgent need to adapt. As property investors turn their gaze inland, away from the exclusive low-lying beach area, ...
See Details:
When sea levels rise, so does your rent
-
Picture2 In a groundbreaking moment, Mrs. Adelaide Siaw Agyepong, CEO-American International School, has achieved yet another milestone by being crowned ‘Icon of Inspiration and Impact for the Year 2023’. The crowning achievement took place in Accra, where Mrs. Siaw Agyepong surpassed contemporaries to clinch this prestigious title at the 5th ...
See Details:
American International School CEO honoured as ‘Icon of Inspiration and Impact’
-
Freetown’s streets were almost empty on Sunday after a curfew was imposed Gunmen in Sierra Leone attacked a military barracks and freed hundreds of prisoners in a “co-ordinated and properly planned” attack, the country’s information minister has said. Sierra Leoneans spent Sunday under a nationwide curfew amid disarray in capital ...
See Details:
Sierra Leone prison breaks co-ordinated - minister
-
Freetown’s streets were almost empty on Sunday after a curfew was imposed Gunmen in Sierra Leone attacked a military barracks and freed hundreds of prisoners in a “co-ordinated and properly planned” attack, the country’s information minister has said. Sierra Leoneans spent Sunday under a nationwide curfew amid disarray in capital ...
See Details:
Address the rise of single parenthood
-
Freetown’s streets were almost empty on Sunday after a curfew was imposed Gunmen in Sierra Leone attacked a military barracks and freed hundreds of prisoners in a “co-ordinated and properly planned” attack, the country’s information minister has said. Sierra Leoneans spent Sunday under a nationwide curfew amid disarray in capital ...
See Details:
Hyundai Chief Picked as Auto Industry Leader of the Year
-
Freetown’s streets were almost empty on Sunday after a curfew was imposed Gunmen in Sierra Leone attacked a military barracks and freed hundreds of prisoners in a “co-ordinated and properly planned” attack, the country’s information minister has said. Sierra Leoneans spent Sunday under a nationwide curfew amid disarray in capital ...
See Details:
Unmarried People Under 35 Outnumber Married Ones
-
Freetown’s streets were almost empty on Sunday after a curfew was imposed Gunmen in Sierra Leone attacked a military barracks and freed hundreds of prisoners in a “co-ordinated and properly planned” attack, the country’s information minister has said. Sierra Leoneans spent Sunday under a nationwide curfew amid disarray in capital ...
See Details:
European interior ministers in Hungary to discuss migration
-
Freetown’s streets were almost empty on Sunday after a curfew was imposed Gunmen in Sierra Leone attacked a military barracks and freed hundreds of prisoners in a “co-ordinated and properly planned” attack, the country’s information minister has said. Sierra Leoneans spent Sunday under a nationwide curfew amid disarray in capital ...
See Details:
Japan on the watch for unlicensed taxis around Narita airport amid foreign tourism spike
-
Freetown’s streets were almost empty on Sunday after a curfew was imposed Gunmen in Sierra Leone attacked a military barracks and freed hundreds of prisoners in a “co-ordinated and properly planned” attack, the country’s information minister has said. Sierra Leoneans spent Sunday under a nationwide curfew amid disarray in capital ...
See Details:
ECOWAS to send high-powered delegation on solidarity visit to Sierra Leone
OTHER NEWS
Despite doing education at the university, Mellon Kenyangi, also known as Mama Bear, did not think of going to class, and teaching students was her dream job.“Since it was not ...
Read more »
213 Sri Lanka Cricket’s Chairman of Selectors, Pramodya Wickramasinghe reported to the Sports Ministry’s Special Investigation Unit( SMSIU) for the Prevention of Sports Offences yesterday for the second day. He ...
Read more »
137 Malindu Dairy (Pvt) Ltd., a leading food production company in Sri Lanka, won the Silver Award in the medium-scale dairy and associated products category at the Industrial Excellence Awards ...
Read more »
Africans Urged to Invest Among themselves, Explore Investment Opportunities in Continent Addis Ababa, November 27/2023(ENA)-The Embassy of Angola in Ethiopia has organized lecture on the “Foreign Investment Opportunities in Angola ...
Read more »
144 The dynamic front row player Mohan Wimalaratne will lead the Police Sports Club Rugby team at the upcoming Nippon Paint Sri Lanka Rugby Major League XV-a-side Rugby Tournament scheduled ...
Read more »
Dozens of people living with disabilities from New Hope Inclusive in Entumbane, Bulawayo on Saturday last week received an early Christmas gift in the form of groceries. The groceries were ...
Read more »
The East African Community (EAC) Summit of Heads of State has admitted the Federal Republic of Somalia to the regional bloc, making it its 8th member country. The decision was ...
Read more »