ECB Collateral Moves Reopen ‘Soup Kitchen’ for Struggling Banks

The European Central Bank’s decision to relax bank funding rules to mirror conditions last seen after Lehman Brothers Holdings Inc.’s collapse signals hard times for lenders.

“The soup kitchen for impoverished euro-zone banks is re-opening,” said Simon Maughan, a strategist at Olivetree Securities Ltd. in London. The easing shows “some peripheral banks have run out of collateral and so we need to widen the bounds of acceptability to accommodate them.”