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Intesa Joins Lloyds Among Borrowers in Record ECB Loan Offer

Updated on
Pedestrians pass an Intesa Sanpaolo SpA bank branch in Rome. Photographer: Alessia Pierdomenico/Bloomberg
Pedestrians pass an Intesa Sanpaolo SpA bank branch in Rome. Photographer: Alessia Pierdomenico/Bloomberg

March 1 (Bloomberg) -- Intesa Sanpaolo SpA, Italy’s second-largest bank, and Lloyds Banking Group Plc of the U.K. were among firms that disclosed the biggest borrowings at the European Central Bank’s record offering of three-year loans.

Intesa borrowed 24 billion euros ($32 billion), while Lloyds took 11.4 billion pounds ($18.2 billion), the companies said yesterday. In all, the Frankfurt-based ECB doled out 529.5 billion euros to some 800 banks, surpassing economists’ median estimate of 470 billion euros in a Bloomberg News survey.

“The number was surprisingly high,” said John Raymond, an analyst at CreditSights Inc. in London. “It’s not necessarily entirely good news because it might mean banks are relying on the ECB more than we thought they would at this stage. You can read it several ways. You would expect them in a difficult market to at least take enough to cover maturities this year.”

Two rounds of three-year loans from the ECB, designed to avert a credit crunch, have eased concern that Europe’s banks would run out of cash or curb lending as the region’s sovereign-debt crisis drove up borrowing costs. The number of financial institutions and the amount borrowed increased from the December operation, when 523 banks took 489 billion euros.

The funds cost the average of the ECB’s benchmark interest rate -- currently at a record-low 1 percent -- over the period of the loans and banks can repay them after a year.

‘Insulated’ From Shocks

“Banks are now largely insulated from shocks in the funding market,” Goldman Sachs Group Inc. analysts Jernej Omahen and Pawel Dziedzic wrote in a note.

The Bloomberg Europe Banks and Financial Services Index of 43 companies rose for a second day yesterday.

Italian banks borrowed 139 billion euros, or 26 percent of the total, according to a person with knowledge of the matter who wasn’t authorized to discuss it publicly. Of that, about 80 billion euros was new borrowing and the rest was rolled over from other ECB loans, the person said.

Banca Monte dei Paschi di Siena SpA, Italy’s No. 3 bank, borrowed between 10 billion euros and 15 billion euros in three-year loans from the ECB, according to a person with knowledge of the matter. UniCredit SpA, Italy’s largest bank, participated in the ECB lending operation, borrowing less than 12.5 billion euros, said a person familiar with the situation.

Italy, Spain, Germany

Italy’s Unione di Banche Italiane Scpa borrowed 6 billion euros, while Banco Popolare SC took 3.5 billion euros, people with knowledge of the matter said. Spokesmen for the companies declined to comment. Mediobanca SpA of Milan planned to apply for 4 billion euros, Chief Executive Officer Alberto Nagel said last week.

Banco Bilbao Vizcaya Argentaria SA, Spain second-largest bank, planned to seek about as much as in December, when it borrowed 11 billion euros, Chairman Francisco Gonzalez told El Pais newspaper on Feb. 26.

Spain’s Banco Sabadell SA took 6 billion euros in three-year ECB loans, after borrowing 4 billion euros in the previous offer, a person with knowledge of the situation said. Banco Popular SA said it participated, without elaborating, while Banco Santander SA, the biggest Spanish bank, declined to comment.

Aareal Bank AG, a German commercial-property lender, said it tapped the three-year loans for about 1 billion euros, while Landesbank Hessen-Thueringen, the German state-owned lender known as Helaba, said it borrowed a “moderate” amount. Both banks said they didn’t need the funds.

Deutsche Bank AG and Commerzbank AG of Frankfurt, the biggest German banks, declined to say whether they participated, as did Munich-based Bayerische Landesbank.

Aegon, HSBC

Aegon NV and SNS Reeal NV of the Netherlands borrowed from the ECB, without saying how much. Achmea Bank took 700 million euros while its Staalbankiers unit borrowed 200 million euros, the company said. ING Groep NV, the largest Dutch financial services firm, and ABN Amro Bank NV said they didn’t participate.

London-based HSBC Holdings Plc, Europe’s biggest bank, said this week that it would take about 350 million euros of loans at the auction after taking 5.2 billion euros previously. A Royal Bank of Scotland Group Plc spokesman declined to comment on whether the Edinburgh-based bank had taken money from the ECB at its latest offering after borrowing 5 billion pounds last year.

France’s largest banks, BNP Paribas SA, Societe Generale SA and Credit Agricole SA, declined to comment. Groupe BPCE Chairman Francois Perol said last week his bank didn’t plan to participate in the ECB operation.

To contact the reporter on this story: Sonia Sirletti in Milan at ssirletti@bloomberg.net; Charles Penty in Madrid at cpenty@bloomberg.net

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

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