* Sabadell to repay up to 4.8 billion euros in January
* Banks likely to take advantage of improved sentiment
* Spanish banks took out around 260 billion euros in
(Adds details, background)
By Jesús Aguado and Sonya Dowsett
MADRID, Jan 11 Spanish banks are likely to start
repaying this month some of the around 260 billion euros ($344
billion) loans they took from the European Central Bank, as
Spain's access to funds improves due to an easing of the euro
Market sentiment towards the euro zone's struggling
economies has been buoyed since the European Central Bank
pledged in September to buy the debt of any country which
Spain's fifth-biggest lender Sabadell, which took
around 24 billion euros in the auctions, intends to pay back
between 10 or 20 percent of the total sum in January, a source
at the bank said on Friday.
"We will begin paying back a symbolic sum of between to 2.4
billion to 4.8 billion euros in January to show that we have
other sources of funding rather than just the ECB," said a
source at the bank on Friday.
The European Central Bank pumped 1 trillion euros into
European banks via two three-year Long Term Refinancing
Operations (LTRO) in December 2011 and February 2012 to avert a
bank liquidity crisis at the height of the euro zone crisis.
Banks can restart repaying the money from January 30.
Spain's two largest banks Santander and BBVA
were among the biggest takers of the cheap cash,
taking around 35 billion euros and around 22 billion euros
Although both banks declined to comment on whether they will
pay back cash this month, analysts expect them to pay back some
of the loans as a sign they can get liquidity from elsewhere.
RUSH TO ISSUE BONDS
Barclays analysts estimate Spain's banks will repay about 30
billion euros in the first quarter, or just over a tenth of what
they took in the two LTRO offers. The analysts predict Europe's
banks will repay some 200 billion euros this quarter.
Caixabank, which took 18.5 billion euros in the
two auctions, still has not decided when to pay back the loans,
a bank spokesman said.
A raft of Spanish corporates and banks, including BBVA and
Caixabank, have issued bonds since the beginning of the year in
a rush to tap improved sentiment towards the Spanish sovereign.
State-rescued lender Bankia has not disclosed how much it
took in the auctions, but analysts estimate the bank tapped more
than 30 billion euros. The bank has not yet decided whether it
will repay some of the cash, a source close to the bank said.
Bankia received 18 billion euros of European Union money in
December, accounting for nearly half the cost of a European
bailout of Spain's ailing lenders after capital levels were
brought dangerously low by over-exposure to a collapsed property
Mid-sized banks Popular and Bankinter tapped 15.3 billion
euros and 9.5 billion euros in the auctions, respectively.
Neither would say if they would start to repay the loans in
The three-year funds were offered to European banks at an
interest rate averaging the rate in the ECB's main one-week
refinancing operations over the next three years. That rate
stood then at 1 percent and has since fallen to 0.75 percent.
($1 = 0.7568 euros)
(Additional reporting by Steve Slater in London; Editing by