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The Oct. 22 repayment is roughly the same as the
5.9 billion euros banks repaid this week and beats the 4.0
billion euros money market traders polled by Reuters had
expected.
Banks are returning funds they took from the ECB in late 2011
and early 2012 to ride out a funding strain at the height of the
debt crisis. Last month, the ECB started offering them new
long-term loans.
Banks still hold about 309 billion euros of the old crisis
loans, and lenders are expected to move them into the new ECB
loan facility before they mature in January and February.
For now though, it is still cheaper for banks to rely on the
ECB's regular refinancing operations, where they can fund
themselves at record low rates of 0.05 percent. They have to pay
an additional 10 basis points for the new four-year loans.
As a result, the ECB's first offer of these so-called new TLTROs
fell flat last month, with banks taking just 82.6 billion euros,
less than expected. They can potentially borrow up to 400
billion euros in September and December offers combined.
On Friday, the ECB said four banks would repay a combined 3.318
billion euros from the first LTRO on Oct. 22 and six would pay
back a total of 2.504 billion from the second LTRO.
(Reporting by Eva Taylor; Editing by Hugh Lawson)
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