MILAN Jan 28 Intesa Sanpaolo has paid back in full the 36 billion euros ($49 billion) in cheap 3-year loans from the European Central Bank, Italy's top retail bank said on Tuesday, the first Italian bank to do so.
Intesa, said it had switched 21 billion euros of those loans into ECB open-market operations - standard funding activities with maturities ranging from one week to three months.
Another 15 billion euros of 3-year loans had been previously paid back.
The ECB had offered European lenders more longer term financing at the end of 2011 and early in 2012 to ride out a period of strained funding conditions in the market at the height of the euro zone debt crisis.
News that Intesa felt confident enough to repay the loans ahead of their due date highlights the gap between Italy's biggest lenders and smaller banks which have instead announced plans to raise capital on the market to boost their finances.
Last Friday, Banco Popolare became the fourth bank among the 15 Italian lenders undergoing a health check by the European Central Bank to announce plans to raise cash, asking for 1.5 billion euros on the market before the summer.
The others are from Monte dei Paschi di Siena, Banca Popolare di Milano and Banca Carige.
Italian banks took a total of 255 billion euros in three year loans form the ECB and Intesa was one of the biggest borrowers under the program.
The shorter-term funding provides Intesa "with more efficiency and flexibility in the management of our liquidity also on the basis of the alternative cost of short-term wholesale funding," it said. ($1 = 0.7313 euros) (Reporting by Silvia Aloisi and Gianluca Semeraro; Editing by Louise Heavens)