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Banks to return 6.977 billion euros in crisis loans to ECB next week

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[May 23, 2014]  FRANKFURT (Reuters) - Banks will return 6.977 billion euros ($9.53 trillion) in long-term crisis loans to the European Central Bank next week, ECB data show, slightly more than this week as the ECB prepares policy steps that could include charges for overnight deposits.

The amount that banks will repay on May 28 is above this week's repayments of 6.155 billion euros, and beats the 4.8 billion forecast in a Reuters poll. <ECB/REFI>

The ECB has signaled its readiness to take fresh policy action at its June 5 meeting after reviewing the latest round of its staff forecasts for the euro zone economy, which are due to come out the same day.

Reuters reported last week that the ECB's policy package would include cuts in all interest rates and targeted measures aimed at boosting lending to small- and mid-sized firms.

Lowering the main refinancing rate would make holding the existing three-year loans - the cost of which is linked to this rate - cheaper and reduce borrowing costs.

But cutting the interest rate on overnight deposits below the current level of zero would effectively mean charging banks for parking their excess cash overnight at the central bank.

On Friday, the ECB said five banks would repay 6.123 billion euros from the first LTRO on May 28, and four banks would pay back 0.854 billion from the second LTRO.

(Reporting by Eva Taylor; Editing by Mark Heinrich)

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