Draghi 1, Ackermann 0

10 February 2012 By Neil Unmack Follow @unmack1

The ECB chief has lampooned “statements of virility” from bankers – like the Deutsche Bank head – who reject cheap liquidity. Draghi is right that lenders’ health rests on the strength of their host nation. It’s also a warning to others tempted to question the central bank.

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European Central Bank President Mario Draghi on Feb. 9 criticised bankers who had made “statements of virility” by announcing that they would not take three-year loans from the central bank.
“The three-year facilities are there to be used”, Draghi told journalists at a press conference. “There is no stigma whatsoever attached to these facilities.”
“I would describe some of the statements made as ’statements of virility’”, Draghi continued. “Namely, that it would be undignified for a serious bank to access these facilities. Now let me say that the very same banks that made these statements actually already access different kinds of facilities such as the euro dollar credit swap facility.”
“Another bank, which according to a newspaper report made an indignant statement that there would be a stigma, actually accessed the LTRO. So, some of these ’virility’ or ’manhood’ statements are often incorrect.”
“I should add that the crisis, which the banking system and the funding system is currently facing, originates from a sovereign crisis. So the banks that happen to be located in countries that do not have any fiscal crisis, that have always undertaken the appropriate reforms, should give more credit to their governments for having been virtuous all along.”
Draghi’s criticism appeared to be aimed at outgoing Deutsche Bank Chief Executive Josef Ackermann, who had indicated the bank may not participate in the ECB’s three-year loans for fear of a market stigma.
“The fact that we have never taken any money from the government has made us, from a reputational point of view, so attractive to so many clients in the world that we would be very reluctant to give that up,” Ackermann told analysts on Feb. 2.

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