Euro-area banks kept short-term borrowing from the European Central Bank steady as they prepare to repay longer-term emergency loans.
Financial institutions took 124.1 billion euros ($167 billion) in the ECB’s main refinancing operation today, down from 125.3 billion euros last week. Banks pay 0.75 percent interest for the 7-day funds.
Some 278 financial institutions will return 137.2 billion euros tomorrow, the first opportunity for early repayment of the initial three-year loan, a so-called longer-term refinancing operation, the Frankfurt-based central bank said last week. That’s more than the 84 billion euros economists predicted in a Bloomberg News survey.
“It seems that periphery banks are using the repayment option for three-year loans more than we expected,” said Juergen Michels, chief euro-area economist at Citigroup Inc. in London. “It is possible that banks from these countries swap part of the three-year LTRO funding into main refinancing operations or three-month loans.”
The ECB will allot fresh three-month funds tomorrow.