Commerzbank Repays $13.6 Billion to ECB as Markets Calm

Commerzbank AG, Germany’s second-biggest lender, said it repaid 10 billion euros ($13.6 billion) in three-year loans it borrowed from the European Central Bank after policy makers stepped in to stabilize markets.

The bank borrowed funds in December 2011 in the first of two tenders via its Eurohypo public finance and commercial real estate lending unit, according to a statement from Frankfurt-based Commerzbank today.

The ECB flooded financial markets with two tranches of so-called Longer Term Refinancing Operations of more than 1 trillion euros after banks stopped lending to each other amid Europe’s worsening debt crisis. ECB President Mario Draghi’s pledge last year to defend the euro and buy bonds of distressed nations if they sign up to bailout conditions first has helped restore investor confidence in the 17-member currency nation.

“It is a positive signal that banks are paying back funds from the ECB’s three-year tender early,” Michael Kemmer, general manager of the BdB Banking Association, said in an e-mailed statement earlier today.

The repayments come as some areas of money markets have “revived” and financial markets found a sense of calm in past months, said Kemmer, whose lobby group represents Commerzbank and other German commercial banks.

Commerzbank’s Eurohypo unit, now called Hypothekenbank Frankfurt, was also able to repay loans because its assets are being wound down or sold, according to the company.

Some 278 financial institutions will return 137.2 billion euros today, the first opportunity for early repayment of the initial tender, the Frankfurt-based ECB said last week.

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