EFTA01388533.pdf

Reserve Exemption (Soniya Sandeesh) • This is exactly what is done in Switzerland, Japan and Denmark where they also have negative deposit rates. • It enables you to help banks without a) tightening policy and increasing EURIBOR b) looking like you are giving them free money. • In hiking deposit rate you are benefiting some banks but harming those using the TLRO. Counter productive. With a reserve exemption, everyone benefits. SEE this report: Unlike the ECB, other Central Banks (eg SNB) with negative rate regimes have chosen to apply exemptions, thereby limiting the cost to the banking sector. Impact on Banks (Kinner Lakhani) • A deposit rate hike to -20bps benefits the sector PBT by 1.6% (with big saving countries like DE 5%) • A exemption of 20x your reserve requirement benefits the sector PBT by 3% (with big saving countries like DE 10%) • If the ECB by a combination of measures (TLTRO 3) manages to take the funding fear off the table the implied benefit is PBT 11% SX7E E At 93.82 Fi 94 . 86 L. 92.43 Prey 93 . /1) SX7E Index 95) Compare 96) Actions • 97) Edit - Candle Chart WNW 2014 01/24 2019 tast P alln - 92 Mov A y<0. .49 Kt ,/ I voi • ill to 30 129 YlD 1Y SY 0:109 V k: if - Table « -2. Chart ontent Watt Pry* RE Ad, 94 at. 1613. 1x71 rx4 • le. c6 m/04:16 7744 • 999.7, (SO main. " •91M4(1a) at CS* Mit •57494 (200) oft Ocas 10999 140 iccia• 4197704 29/6 01) 2011 20$ Martin Zeman Director I Key Client Partners Dcuhcbc Bank Vecnitti Management 345 Park Avenue, Now York. 10154 office 4 1(212)250-0432 mobile 4 1(808) 280-7881 CONFIDENTIAL - PURSUANT TO FED. R. CRIM. P. 6(e) DB-SDNY-0092133 CONFIDENTIAL SDNY_GM_00238317 EFTA01388533