This is what Zerohedge is quoting, from
US banks have become the unlikely saviours of their ailing European counterparts, signing private agreements to lend them billions of dollars in
recent weeks after an exodus of nervous money market funds left many without ready access to short-term funding.
Agreements worth tens of billions of dollars have been signed in the last month alone, according to bankers directly involved, who added that
senior management of firms on both sides of the transactions have been closely involved with hammering out deals.
French lenders are among those using such facilities, say bankers, although deals have also been struck with UK and other European firms. Loans
have been made as repo agreements, with banks posting assets such as corporate loans and mortgage portfolios as collateral.
“We were able to use some of our assets to get long-term repos,” said one board member at a French bank. “It was a move we made to monetise
some of the assets we had on the balance sheet which were good, quality assets, and also to mitigate the withdrawal of money market funds.”.
Paris-based Societe Generale said that it had struck US dollar repo deals equivalent to €6bn against a portfolio of commercial mortgage-backed
securities and collateralised loans with maturities longer than six months. US bankers say other banks have struck similar deals in recent weeks to
One source at BNP Paribas with knowledge of the situation said the bank was using US dollar repo markets for fixed income activity, but “not
more than usual”, though the bank acknowledged that its use of short-term US money market funds dropped by €10bn to €36bn since the end of July.
“Doing repo means you don’t have to sell and don’t have to take the loss on many of these assets upfront,” said another banker at a US
bank, who has signed off on such deals in recent weeks. “You can do it privately, so nobody needs to know, and spread losses over the lifetime of
The fact that US banks are willing to increase their exposure to European firms – even if they insist on significant haircuts and conservative
interest rates – demonstrates that they are happy dealing with such counterparties, at least for the moment.