UPDATE 1-Bank deposits at ECB climb to new record high

FRANKFURT Jan 18 (Reuters) - Commercial banks parked over half a trillion euros at the European Central Bank for the second day in a row, as the mix of debt crisis worries and a recent giant injection of ECB cash left banks awash with money but too scared to lend it.

Overnight deposits at the ECB have been hitting new records even since last month's first ever offering of three-year loans from the ECB pumped 490 billion euros ($620 billion) into the banking system.

ECB data on Wednesday showed deposits hit an all-time high of 528 billion euros, up from 502 billion the previous day. It is likely to mark at least a temporary peak in the level of hoarding.

The end of the ECB's monthly reserves cycle - the point when banks have fulfilled their ECB targets and have few options to juggle their funding - ended on Tuesday. Deposits traditionally drop early in the new reserves cycle.

Changes to the ECB's reserves rules, which will mean banks have to keep less of a cash buffer at the ECB, will also kick in on Wednesday. The move will cut banks' reserves ratio requirements to 1 percent from 2 percent and is set to save banks 100 billion euros according to the ECB.

On one hand that could mean banks - who won't be able to repay old ECB loans early - may have even more spare cash to deposit.

Alternatively, the impact may be minimal if banks react by cutting back on what they take at the ECB's once-a-week, 7-day funding handouts. However, there are no signs of this at least yet. On Tuesday, they took 127 billion euros in one-week funds, more than expected by traders in a Reuters poll and 16 billion more than the week before.

With total ECB lending at 664 billion euros, banks are now storing over three-quarters of money lent by the ECB at the central bank, compared with around a third after the collapse of Lehman Brothers back in late 2008.

The recent rise in the headline deposit number was largely expected by money market experts considering banks' huge uptake of the three-year funding.

While banks deposited less than 300 billion euros at the ECB at the peak of the last two reserve maintenance periods, the proportion - at over 65 percent - was not much lower than it is as now.

The deep reluctance of banks to lend to one another continues to paralyse money markets and highlights the barriers to achieving any substantial relief in the euro debt crisis.

ECB President Mario Draghi was unconcerned about the high deposits in remarks made on Monday, brushing off concerns that liquidity was not making its way to the real economy. (Reporting by Sakari Suoninen)