Banks return 2.6 bln eur as 3-year loan repayments resume - ECB

Fri Jan 10, 2014 6:33am EST

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FRANKFURT, Jan 10 (Reuters) - Banks will return 2.566
billion euros ($3.49 billion) in crisis loans to the European
Central Bank next week, draining less liquidity than expected
out of the financial system as the repayments resume.
    The ECB stopped early repayments of more than 1 trillion
euros in three-year loans over the turn of the year to avoid a
liquidity squeeze.
    The amount banks will repay on Jan. 15 is a fraction of the
20.7 billion euros they returned at the last opportunity in 2013
in the week of Dec. 23 and less than the 6 billion euros that
was forecast in a Reuters poll.  
    The speed with which banks repaid the long loans they took
from the ECB in late 2011 and early 2012 to ride out a period of
strained funding conditions accelerated towards the end of last
year, which was the cut-off point for an ECB snapshot of banks'
balance sheets that it will assess this year.
    ECB President Mario Draghi on Thursday pointed to the
possibility of some short-term deleveraging as banks prepare for
the assessment, which will look at whether lenders have set
aside sufficient capital to cope with the risk on their books.
    Such developments should, however, be seen in a longer term
context, Draghi added, saying that by the end of this year, the
banking system would be stronger and more transparent.
    The slowdown in repayments also puts the brakes on the drain
in excess liquidity, easing upward pressure on bank-to-bank
lending rates at a time when the euro zone recovery is slowly
beginning to take hold. 
    Excess liquidity or cash beyond what lenders need to cover
their day-to-day operations stood at 156 billion euros on Friday
and will fall by another 2.566 billion on Wednesday when the
repayments are settled. 
    Although the connection between money market rates and
excess liquidity is difficult to pin down, Draghi stressed that
the ECB would monitor developments closely and was ready to
consider all available instruments.
    On Friday, the ECB said three banks would repay 0.980
billion euros from the first LTRO on Jan. 15, and five banks
will pay back 1.586 billion euros from the second LTRO.
    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
    Sept. 13, 2013      0.741              2.375
    Sept. 20, 2013      2.650              5.260
    Sept. 27, 2013      1.535              1.622
    Oct. 4, 2013        4.610              3.065
    Oct. 11, 2013       0.597              0.250
    Oct. 18, 2013       0.105           5.094
    Oct. 25, 2013       1.445              0.311
    Nov. 1, 2013        5.288              5.363
    Nov. 8, 2013        2.910              2.857
    Nov. 15, 2013        3.155              0.431
    Nov. 22, 2013        2.841              5.0815
    Nov. 29, 2013       5.105              2.130
    Dec. 6, 2013        3.138              3.932
    Dec. 13, 2013       3.320             19.330
    Dec. 20, 2013         4.050          16.675
    Jan. 10, 2014       0.980              1.586    
    ===============================================   
    Amount outstanding as of Jan. 9   
                      207.916            336.496

($1 = 0.7361 euros)

 (Reporting by Frankfurt newsroom)
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