ECB Says Banks to Repay EU2.3 Billion of 3-Year Loans Next WeekStefan Riecher
The European Central Bank said banks will repay 2.3 billion euros ($3 billion) of three-year loans next week.
Five banks will return 1.7 billion euros borrowed in the first of the so-called Longer Term Refinancing Operations, and six will repay 615 million euros of the second tender, the Frankfurt-based ECB said in a statement today. That takes the total amount of money repaid early to 276.8 billion euros, or 27 percent of the amount lent.
The ECB flooded financial markets with three-year loans totaling more than 1 trillion euros a year ago after banks stopped lending to each other because of Europe’s debt crisis. Banks have the option of repaying the funds, which were offered at the average of the ECB’s benchmark rate over their duration, after a year.
With doubts growing about an economic recovery later this year, ECB policy makers have signaled they are looking at a range of measures to boost growth, including an interest-rate cut and more long-term loans.
“So far we haven’t seen any improvement in the situation” since the last rate decision on April 4, ECB President Mario Draghi said on April 19. The Frankfurt-based central bank in March cut its forecasts and now predicts the 17-nation euro economy will shrink 0.5 percent this year before growing 1 percent in 2014.
The ECB still allows banks to borrow as much money as they want against eligible collateral for periods of one week, one month and three months.