Germany's Siemens Pulled 500 Million Euro from a French Bank

One day after the announcement that the company will pull out of nuclear power business, it has been revealed today that Siemens, headquartered in Munich, Germany, had pulled 500 million euros (US$684 million, 52 billion Japanese yen) 2 weeks ago from an unnamed French bank which is not BNP. (So it's either Societe Generale or Credit Agricole...)

And what did the company do with the money? It deposited the money to the European Central Bank for safety and higher interest. How could an engineering company make a diposit at a central bank? Because Siemens does have a bank, for about a year.

From Financial Times (9/19/2011):

Siemens withdrew more than half-a-billion euros in cash deposits from a large French bank two weeks ago and transferred it to the European Central Bank, in a sign of how companies are seeking havens amid Europe’s sovereign debt crisis.

The German industrial group withdrew the money partly because of concerns about the future financial health of the bank and partly to benefit from higher interest rates paid by the ECB, a person with direct knowledge of the matter told the Financial Times.

In total, Siemens has parked between €4bn ($5.4bn) and €6bn at the ECB’s facilities, mostly through one-week deposits, this person said. Only a handful of large companies have the banking licences that allow them to deposit cash directly with the ECB.

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The company’s move came almost a year after Europe’s largest engineering conglomerate prepared itself for a future financial crisis by launching its own bank, an unusual move for an industrial group outside the car sector, where companies run big car financing and leasing businesses.

In an interview last December, Roland Châlons-Browne, chief executive of Siemens’ financial services unit, said its banking business would enable the group to tap the central bank for liquidity and deposit cash at the ECB.

“In the case of another financial crisis, we will be able to broaden our flexibility and take out risk with our own bank,” Mr Châlons-Browne said at the time.

Siemens does not only use the ECB as a haven; it also gets paid a slightly higher interest rate than it would get from a commercial bank.

The ECB paid an average interest rate last week of 1.01 per cent for its regular offers of one-week deposits, under which it withdraws from the financial system an amount of liquidity equivalent to the amount it has spent on eurozone government bonds.

That compares with an average overnight interest rate paid by eurozone banks of 0.95 per cent.

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