Fri Oct 11, 2013 6:22am EDT
FRANKFURT, Oct 11 (Reuters) - Banks will return 847 million euros of crisis loans early to the European Central Bank next week, it said on Friday, a small repayment that keeps excess liquidity relatively stable and offsets upward pressure on market interest rates. By repaying the ECB's crisis funds early, banks reduce the level of excess liquidity - cash beyond what they need to cover their day-to-day operations - in the system. With banks choosing to return the smallest amount in seven weeks to the central bank, the excess is likely to remain close to today's 216 billion euros. Repayments are also well below Reuters poll estimates, with euro money market traders having ad expected banks to return 4.0 billion euros next week. Excess liquidity is now close to levels seen in late 2011, just before the ECB flooded the market with more than 1 trillion euros in long-term refinancing operations (LTROs) to ease banks' funding strains. Short-term money market rates are seen rising closer to the ECB's main refinancing rate, currently at 0.5 percent, once excess liquidity in the system falls below a threshold estimated to be in the range of 100 billion to 200 billion euros. The ECB is monitoring this development carefully as higher bank-to-bank borrowing costs could undermine the euro zone's fragile recovery. Last week, ECB President Mario Draghi said the bank is watching moves in market rates closely and is ready to use any policy option to temper them if needed. However, Governing Council members have since said the discussion is wide open. The three-year loans from the ECB in two LTROs in December 2011 and February 2012 mature in early 2015. Banks now have the option to repay the loans early and have returned about a third of the money already. On Friday, the ECB said four banks would repay 597 million euros from the first LTRO on Oct. 16, and one bank will pay back 250 million 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 =============================================== Amount outstanding as of Oct. 10 239.870 397.950 (Reporting by Frankfurt newsroom; Editing by John Stonestreet)
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