BMW’s Bank has seen deposits jump almost 70% over the past five months and the cash infusion is helping the company cope with the frozen credit markets as WNYC reported on March 26th.
This development is not just observable with the BMW bank but also with the bank from Volkswagen, AUDI, etc
Traditionally, the German car banks offered financing opportunitites for normal car loan and for their dealers. Around 10 years ago those car banks recieved the banking license and where from now operating as any other bank.
But how is it possible that the deposits of the BMW banks increased so much in past few months?
Jonathan Rosenthal argues that the German population thinks that this bank is saver than the "normal" banks because they have tangible assets such as plants. Additionally, the interest rates are currently between 5 to 5.5% on deposits whereas the majority in Germany offers 2 to 2.5%.
The perception that these banks are less risky is not supported by the ratings. These car banks are actually rated more risky. Jonathan Rosenthal advices the German government to keep an eye in this development!
The interest rates are so high because the firm use it to keep the company and its dealers running.
I have a time-deopsit at the BMW bank and I get 5.25% interest currently. This contract expires this August but due to these exellent interest rates, I probably will open again a time-deposit. I might even be able to recieve an even higher interest! And I am not really concerned about the risk because, the German government promised that they'll make sure everyone gets their deposits back in the case of bankruptcy due to bailouts!
