Italy’s Top Banks Took About 30% of ECB’s TLTRO Funds

Italy’s biggest banks borrowed more than 30 billion euros ($32 billion) in the European Central Bank’s third targeted-loan operation, about a third of the total.

Banks across Europe took 97.8 billion euros in targeted loans, or TLTROs, offered by the ECB in an effort to stimulate the economy. That compares with 130 billion euros borrowed in in December and 82.6 billion euros in September.

By tying cheap four-year credit to the size of banks’ loan books, the ECB is betting the funds will spur lending to companies and individuals. Italy, the euro-region’s third-biggest economy, is starting to emerge from its longest recession on record, while the government is considering creating a bad bank to accelerate disposals of banks’ problematic assets.

“Italian banks are willing to take money from the ECB because it’s not perceived as a lack of liquidity but as a signal that they want to increase lending,” said Fabrizio Bernardi an analyst at Fidentiis Equities. “After five years, Italian lenders are finally spurring credit on signals Italy is emerging from recession and firms want to invest for growth.”

Intesa Sanpaolo SpA, Italy’s second-biggest bank, was the biggest borrower among lenders that disclosed their figures, taking 10 billion euros. That’s adding to the 12.6 billion euros borrowed in the first two auctions.

UniCredit SpA borrowed 7.9 billion euros in the latest auction, most of it linked to Italian loans, Italy’s biggest lender said in an e-mailed statement. Banco Popolare SC borrowed 5 billion euros, Mediobanca SpA got 4.5 billion euros and Unione di Banche Italiane SCPA took 2.9 billion euros, spokesmen for the banks said.

Each institution’s entitlement depends on the extent to which it has changed its amount of lending to companies and households, excluding mortgages, over a set period. A further five operations are scheduled on a quarterly basis through next year, and all the loans have a maturity date of September 2018.

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