The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site.

All material subject to strictly enforced copyright laws. © 2021 Euromoney, a part of the Euromoney Institutional Investor PLC.

Liko-Bank – Europe’s last resort?

Few people expect a large bank to carry enough capital to meet every conceivable financial and operational catastrophe - except perhaps Daniel Zuberbühler, director of the Swiss Federal Banking Commission. In recognition of this, regulators and bankers are wrestling with the question of who should provide liquidity if a "too-big-to-fail" bank gets into trouble and threatens dislocation of the financial system?


The possible choices are: central banks as lenders of last resort; insurance; or mutual insurance by banks themselves.


Some Germans believe they have a model that combines the first and the last of these. In 1974, after the Herstatt crisis which dislocated international currency markets and threatened bank liquidity in Germany, the Germans set up their own Liquiditäts-Konsortialbank - Liko-Bank for short.


It is owned 30% by the Bundesbank and 70% by individual members of the various German bank associations. It has capital and reserves of e224 million with total callable liquidity of e1.7 billion. Its single board includes representatives from the bank associations and the Bundesbank, including Bundesbank president Ernst Welteke, and Commerzbank chairman Martin Kohlhaussen. It has a credit committee headed by Kohlhaussen, which includes Bernd Thiemann, head of DG Bank and Bundesbank director Helmut Schieber.




You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.

SUBSCRIBE ONLINE TODAY

Unlimited access to Euromoney.com and Asiamoney.com

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually

FREE 7 DAY TRIAL

Unlimited access to Euromoney.com and Asiamoney.com, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors

LOGIN NOW

Already a user?

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree