Weidmann-Bundesbank profit will be crimped by reserves

Sun Feb 26, 2012 11:50am EST
 
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BERLIN (Reuters) - The Bundesbank profit turned over to the federal government will be considerably smaller this year than in 2011 due to the risk provisions linked to the euro zone crisis, central bank president Jens Weidmann was quoted telling Der Spiegel.

Weidmann said the German central bank had to raise its reserves due to the greater risks and had consulted with its accountants. In 2012 the Bundesbank had a 2.2 billion euro profit and set aside 1.6 billion for risks.

"The distributed profit will be considerably less than last year," Weidmann said, without providing any specific numbers.

Weidmann also said that he had doubts whether European central banks will be able to make a profit on Greek sovereign bonds that euro zone countries are eager to use as part of the latest Greek bailout.

"It's assumed that the central banks will earn a profit from purchasing the bonds. But that is not certain at all. On the contrary, the balance sheet risks have increased. And that affects not only the Greek bonds but also all the extraordinary monetary measures related to the crisis."

(Reporting By Erik Kirschbaum; Editing by Elaine Hardcastle)