Banks to return 2.86 billion euros in crisis loans to ECB next week
Banks will return 2.861 billion euros (2 billion pounds) in long-term loans to the European Central Bank next week after the ECB started to charge for holding banks’ excess cash overnight and promised more long-term loans.
The amount that banks will repay on Aug. 20 is less than this week’s crisis-loan repayments of 4.15 billion euros and misses the 4.0 billion forecast in a Reuters poll.
The ECB cut interest rates to record lows in June – the deposit rate to below zero – and took several steps to boost lending to euro zone companies. It also pledged to do more if needed to fight off the risk of Japanese-style deflation.
The measures include a new four-year loan scheme, which the ECB hopes will encourage banks to boost their lending.
Banks continue to repay LTRO funds they took from the ECB in late 2011 and early 2012 as they are going through ECB health checks, which are in their final stages now with a Europe-wide bank stress test.
On Friday, the ECB said two banks would repay 300 million euros from the first LTROs on Aug. 20 and six banks would pay back 2.561 billion from the second LTRO.
[Reuters]
