Italy, Spain Banks Get Revenue Lift From ECB LTRO, Goldman Says

Italian and Spanish banks may get a revenue boost of as much as 11 billion euros ($14.7 billion) over three years as they increase government debt holdings as part of European Central Bank refinancing, Goldman Sachs Group Inc. said.

Spanish and Italian banks acquired more than 104 billion euros of notes from their own countries between December and February after tapping the first three-year refinancing from the ECB, Goldman Sachs analysts led by Jernej Omahen estimated in a note today. “Ample additional liquidity should result in continued sovereign-bond purchases” through the first half after the ECB provided a second set of funds at the end of February, the analysts wrote.

French and German banks maintained “flat” holdings of Italian and Spanish bonds, the analysts said. Spanish and Italian banks have probably reaped 22 billion euros in capital gains on bonds from their own countries, they said.

To contact the reporter on this story: Fabio Benedetti-Valentini in Paris at fabiobv@bloomberg.net

To contact the editors responsible for this story: Frank Connelly at fconnelly@bloomberg.net; Edward Evans at eevans3@bloomberg.net

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