Tuesday, January 31, 2012

European Banks to Borrow a Trillion in February

Last time the ECB offeed generous loans to European banks they borrowed a record 489B Euros. The Financial Times says next time they will take a trillion in long-term refinance operations (LTRO).

"European banks are preparing to tap the European Central Bank’s emergency funding scheme for up to twice as much as the ECB supplied in its debut €489bn auction last month, providing further evidence of the sector’s liquidity squeeze.

Several of the eurozone’s biggest banks have told the Financial Times that they could well double or triple their request for funds in the ECB’s three-year money auction on February 29.

“Banks are not going to be as shy second time round,” said the head of one eurozone bank at last week’s World Economic Forum in Davos. “We should have done more first time.”

Three bank chief executives, all of whom asked to remain anonymous, said they were planning to increase their participation twofold or threefold".

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