De­mand for ECB loans raises bank fund­ing fears

The Pak Banker - - Front Page -

FRANK­FURT: Fears that fi­nan­cial in­sti­tu­tions are still fac­ing prob­lems se­cur­ing mar­ket fund­ing have been raised af­ter the Euro­pean Cen­tral Bank (ECB) saw stronger than ex­pected de­mand for three­month loans.

Banks across the eu­ro­zone on Wed­nes­day bor­rowed €149.5bn (£127.2bn) dur­ing the ECB's 98-day liq­uid­ity op­er­a­tion, far higher than an­a­lysts' ex­pec­ta­tions of €105bn. The in­ter­est rate at­tached to the loans is in­dexed to the cen­tral bank's main re­fi­nanc­ing rate, which cur­rently stands at 1pc.

The ECB said 270 banks bid for funds in the ten­der, where banks are guar­an­teed to get all the money they request. Each in­sti­tu­tion is re­quired to set­tle its loans on March 31.

The funds were is­sued ahead of Thurs­day's dead­line for €97bn-worth of 12-month loans. Banks will also be given a chance to take a 13-day loan from the Euro­pean Cen­tral Bank to smooth over the yearend pe­riod.

Bank­ing an­a­lysts said the 98-day loan fig­ure in­di­cated "ruc­tions in eu­ro­zone pe­riph­eral mar­kets", but added the pic­ture would not com­plete be­fore 13-day ten­der re­sults were an­nounced on Thurs­day. -PB News

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