Euribor rates jump after early 3-yr loan repayments

Mon Jan 28, 2013 5:15am EST

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FRANKFURT, Jan 28 (Reuters) - Euribor bank-to-bank lending
rates jumped on Monday after banks decided to repay early more
than expected of crisis loans they took from the European
Central Bank just over a year ago. 
    The ECB said on Friday that 278 banks would return a total
137.2 billion euros ($183 billion) of the three-year loans they
took in December 2011, making use of the earliest repayment
opportunity on Jan. 30.
    A Reuters poll had forecast a return of 100 billion euros.
    The larger-than-expected repayment is a sign that at least
parts of the financial system are returning to health.
    Banks took more than 1 trillion euros of ultra-cheap,
three-year loans, or Long-Term Refinancing Operations, from the
ECB in two separate offers roughly a year ago. The ECB used
these LTROs to try to restore order to Europe's crisis-hit
financial system.
    Banks can repay the money early on a voluntary basis weekly
from now on and while the heavy oversupply of ECB cash has long
depressed the rates banks charge each other on lending markets,
a significant repayment could drive rates higher.
    Reuters calculations show there is currently around 581
billion euros of excess liquidity sitting in euro
zone banks.
    On Friday, three-month Euribor rates,
traditionally the main gauge of unsecured bank-to-bank lending,
rose to 0.224 percent from 0.214 percent.
    The six-month rate rose to 0.370 percent from 0.356 percent
while the one-week rate inched higher to 0.082
percent from 0.081 percent. The overnight Eonia rate 
rose to 0.071 percent from 0.068 percent.
    Dollar-priced bank-to-bank Euribor lending rates
  were lower, with three-month rates
falling to 0.48455 percent from 0.49000 percent and one-week
rates dropping to 0.32909 percent from 0.33364 percent.
    
    Euribor rates are fixed daily by the Banking Federation of 
the European Union (FBE) shortly after 0900 GMT.
    * For a table of the latest Euribor fixings for terms of one
week to one year, double click on 
    * For a table of the previous day's fixings of EONIA swap 
rates, which show market expectations for future overnight 
lending rates, double click on 
    * For graphs of historic Euribor and EONIA swap rates, right
click on the links in angle brackets below, and select 'Related 
Graph'  
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 (Reporting by Frankfurt newsroom)
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