FRANKFURT, March 7 Cash deposits to cover
the declining value of guarantees posted against European
Central Bank loans rose to their highest level ever last week,
balance sheet data showed, a development which analysts pegged
to the ECB's move to exclude Greek government bonds from
Deposits related to margin calls - money that banks place at
the ECB after the market value of their collateral value
declines - jumped to 17.1 billion euros at the end of last week
from 2.9 billion the week before.
"This fits in well with the Greek developments," Commerzbank
economist Michael Schubert said, referring to the market value
of Greek bonds banks have.
"Usually there is overcollateralisation, they would use more
of the available collateral, but now there was a squeeze in some
peripheral countries, in Greece and maybe in Cyprus," he added.
Last week, the ECB announced it would no longer allow
borrowing against Greek government bonds. The temporary move
came after rating agency Standard & Poor's downgraded the
country to selective default.
The bonds are expected to become eligible again in the
coming weeks after the euro zone's rescue fund EFSF puts 35
billion euros on the line to guarantee collateral use of Greek
Schubert said that the spike in margin call deposits was
likely to go away soon.
"This should disappear very soon as we have this collateral
enhancement scheme and as soon as it works, this will disappear
again," he said.
(Reporting by Sakari Suoninen; Editing by Toby Chopra)