US cities got €18.5 billion from German banks

US cities got €18.5 billion from German banks
Photo: DPA
Germany's biggest banks have been lending US cities money to the tune of around €18.5 billion. Bankrupt Detroit, it emerged on Monday, has been on of the main recipients, causing concern for Commerzbank.

Unlike in Germany, cities and towns in the US can declare insolvency. And after Detroit did just that, financial supervision group Bafin looked at how much money German banks and insurance companies have been lending their transatlantic friends of late, the Frankfurter Allgemeine Zeitung reported on Monday.

Eurohype, a subsidiary of Germany’s second largest bank Commerzbank, lent €310 million to Detroit alone in the run up to it declaring bankruptcy this month. A large part of this has already been written off, in another blow for the ailing German business.

In general, the European powerhouse has been increasingly reluctant to lend money stateside since the financial crisis.

The €18.5 billion lent by German banks and insurers is a lower figure than was once usual. Three years ago Germany was lending the US a fifth more than that, according to Bafin.

At the end of March this year, German companies had €37 billion in outstanding credit to the US, this is 11 percent less than three years ago, wrote the paper.

The Local/jcw

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