ECB’s long-term bank loans to top €1 trillion

THE EUROPEAN Central Bank (ECB) is likely to see demand for its three-year loans rise to nearly €1 trillion (£840bn) at its next auction, according to Credit Suisse analysts.

They suggest that with looser collateral requirements coming into effect for the next sale of long-term money, banks will take out €500bn in loans in addition to the €489bn borrowed in December.

But the sale will see “an increasing divide between those banks that participate and those that don’t”.

The analysts add that the positive impact of the long-term refinancing option (LTRO) will only be around €4.4bn in aggregate by next year because funding costs are increasing over the long-term. Spanish and Italian lenders will pocket most of the benefit, they estimate.