Banks to repay 5.9 bln euros of ECB crisis loans

Fri Sep 6, 2013 6:26am EDT

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FRANKFURT, Sept 6 (Reuters) - Banks will return 5.905
billion euros ($7.75 billion) of crisis loans early to the
European Central Bank next week, the biggest repayment since
late May in a sign they are returning to health.
    However, the bumper early repayment is a potential problem
for the ECB if the withdrawal of cash from the financial system
pushes up market interest rates - a trend the central bank is
trying to counter with its 'forward guidance.' 
    The ECB said on Thursday it was ready to cut interest rates
or pump more money into the euro zone economy if needed to bring
down money market rates. 
    The policy option with fewest side effects to steer down
market interest rates would be another ultra-long-term funding
operation, or LTRO - a measure that could come with more
favourable terms than the existing loans to attract banks. 
    Banks took more than 1 trillion euros of three-year loans
from the ECB in two LTROs in December 2011 and February 2012, of
which the first matures in January 2015. 
    They now have the option to repay the loans early and have
returned almost a quarter of the money already.   
    On Friday, the ECB said five banks would repay 3.705 billion
euros from the first LTRO on Sept. 11 and two banks will pay
back 2.2 billion euros from the second LTRO.
    A Reuters poll of euro money market traders had expected
banks to return 1.5 billion euros next week. 
     
    Announcements on details of LTRO early repayments (bln euro)
First LTRO (Dec. 2011) Second LTRO (Feb. 2012) 
 
    Jan. 25, 2013     137.1591   
    Feb. 1, 2013        3.4840   
    Feb. 8, 2013        4.9925   
    Feb. 15, 2013       3.7900   
    Feb. 22, 2013       1.7440            61.092     
    March 1, 2013       4.1760             8.319     
    March 8, 2013       1.3360             2.894     
    March 15, 2013      0.385              6.432     
    March 22, 2013      1.565              0.371     
    March 28, 2013      3.845              3.160    
    April 5, 2013       4.092              3.972    
    April 12, 2013      6.555              4.238   
    April 19, 2013      8.874              2.068   
    April 26, 2013      1.661              0.615  
    May 3, 2013         0.008              0.608 
    May 10, 2013        1.205              5.152 
    May 17, 2013        1.020              0.104 
    May 24, 2013        6.208              1.915
    May 31, 2013        2.810              0.271
    June 7, 2013        2.800              0.130
    June 14, 2013       3.008              0.180
    June 21, 2013       5.030              0.208
    June 28, 2013       2.025           0.035
    July 5, 2013        0                  2.095
    July 12, 2013       0.513              0.702
    July 19, 2013       2.182              0.200
    July 26, 2013        1.064              0.451 
    Aug. 2, 2013        1.800              0.333
    Aug. 9, 2013        0.516              0.200
    Aug. 16, 2013       0.204              0.450
    Aug. 23, 2013       0.100              0.205
    Aug. 30, 2013       0.100              4.545
    Sept. 6, 2013       3.705              2.200
    ===============================================   
    Amount outstanding as of Sept. 5   
                      253.190            412.560 
($1 = 0.7623 euros)

 (Reporting by Frankfurt newsroom)
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