Banco Sabadell to Study Repayment of ECB Emergency Loans

Banco Sabadell SA (SAB), Spain’s fifth- biggest lender, may start to repay emergency loans from the European Central Bank in January.

Sabadell will consider repaying between 10 percent and 20 percent of the 24 billion euros ($32 billion) of loans this month that it borrowed under the ECB’s longer-term refinancing operation, said an official for the bank who asked not to be named in line with company policy.

Spanish banks including Sabadell took advantage of the more than 1 trillion euros of cheap three-year loans that the ECB channeled into Europe’s banking system at the end of 2011 and start of 2012 to help calm the region’s financial crisis. Banco Santander SA (SAN), Spain’s biggest bank, has about 35 billion euros of LTRO loans and Banco Bilbao Vizcaya Argentaria SA (BBVA), the second-biggest, about 22 billion euros.

Funding conditions have improved for the Spanish government and lenders this month, allowing banks including Sabadell to tap wholesale debt markets. The Sabadell, Spain-based bank sold 1 billion euros of five-year covered bonds today at a spread of 250 basis points over the benchmark swap rate.

To contact the reporter on this story: Charles Penty in Madrid at cpenty@bloomberg.net

To contact the editor responsible for this story: Frank Connelly at fconnelly@bloomberg.net