Public money for private banks…nothing but austerity for the masses of Europe….state intervention for a speculators charter? http://www.investmentweek.co.uk/investment-week/news/2156010/banks-borrow-eur529bn-ecb European banks have borrowed €529bn from the European Central Bank in the second tranche of its three-year long-term refinancing operation (LTRO), asking for more support than forecast.
Analysts forecast the ECB would lend between €200bn to €1rn, but the total figure was above the median of €500bn. The fresh injection into the European financial system comes after the first tranche in December, when the ECB injected €489bn of three-year cheap loans into the market. In total 800 banks sought funds this time, as opposed to 523 in the first LTRO.
The stimulus is expected to support the recent risk rally in markets triggered by the first tranche of the LTRO in December. Some commentators have suggested the wave of new money could stave off the threat of another credit crunch, as it gives European banks a lifeline to stock up on capital.
Commenting before the auction, Bank of England governor Mervyn King said: "The ECB LTRO has removed the risk of bank run in the euro area, like the UK's quantitative easing programme has achieved."
Early estimates of the net new liquidity provided by the second operation have pointed to a figure higher than the near €200bn seen at the first LTRO. ING said net new liquidity for this week's operation stood at around €270bn, with BarCap citing a figure of €313bn. The remainder of the new funds will serve to roll over banks' existing borrowings
