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ECB bank-funding programme sees low take-up | ECB bank-funding programme sees low take-up |
(35 minutes later) | |
A European Central Bank measure designed to stimulate the flagging eurozone economy has seen a low initial take-up by banks. | A European Central Bank measure designed to stimulate the flagging eurozone economy has seen a low initial take-up by banks. |
The cheap loans for European banks have been designed to encourage lending to business. | The cheap loans for European banks have been designed to encourage lending to business. |
But out of total loans of 400bn euros (£315bn) available on Thursday, only 82.6bn was taken up by 255 banks. | But out of total loans of 400bn euros (£315bn) available on Thursday, only 82.6bn was taken up by 255 banks. |
However, banks may be waiting for separate ECB measures due in October, analysts said. | However, banks may be waiting for separate ECB measures due in October, analysts said. |
Cheap loans to banks were part of a package announced in June designed to support lending and the economy. | Cheap loans to banks were part of a package announced in June designed to support lending and the economy. |
The loans - called "targeted longer-term refinancing operations" (TLTROs) - see the banks pay 0.15% annual interest for up to four years. | The loans - called "targeted longer-term refinancing operations" (TLTROs) - see the banks pay 0.15% annual interest for up to four years. |
Money market traders had been expecting banks to take up between 100bn and 200bn euros of TLTROs this week, with further interest in December, when banks get a second chance to apply for the cash. | Money market traders had been expecting banks to take up between 100bn and 200bn euros of TLTROs this week, with further interest in December, when banks get a second chance to apply for the cash. |
Banks may be wary of taking up the loans before imminent ECB-led health-checks of the banking sector, said Karel Lannoo, chief executive of Brussels think tank the Centre for European Policy Studies. | Banks may be wary of taking up the loans before imminent ECB-led health-checks of the banking sector, said Karel Lannoo, chief executive of Brussels think tank the Centre for European Policy Studies. |
"The European financial sector continues to be weak," said Mr Lannoo. "There may be a stigma because the markets are waiting for the AQR (asset quality review) in a few weeks." | |
However, banks may be waiting for details of a separate ECB programme to buy asset-backed securities, which are due out in October. | However, banks may be waiting for details of a separate ECB programme to buy asset-backed securities, which are due out in October. |
"We would warn about drawing too strong conclusions from the September round," said ABN Amro analyst Nick Kounis. | "We would warn about drawing too strong conclusions from the September round," said ABN Amro analyst Nick Kounis. |
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