The FINANCIAL -- The European
Central Bank said Friday that 278 eurozone banks will repay early 137.16
billion euros ($184.5 billion) of ultra-cheap three-year loans made
available to them a year ago in emergency liquidity measures.
Under the ECB's special long-term refinancing operations or LTROs, which it launched to avert a looming credit crunch in the single currency area, banks had the option of repaying any part of the money after just one year.
"Accordingly, on January 30, 137.159 billion euros will be repaid in the tender by 278 counterparties," the ECB said in a short statement.
The LTROs, injections of liquidity into the banking system with exceptionally-long maturities of three years, were launched in two batches, in December 2011 and February 2012.
As EUbusiness said, at the time, they were widely credited with pulling Europe back from the brink of a dangerous credit crunch.
Both rounds of LTRO included provisions to allow early repayment after one year, if banks so chose, with the first repayment window opening on January 30, and the second on February 27. After that, repayments can continue on a weekly basis, depending on demand.
Some analysts believe that the speed and size of the repayments could be seen as a sign that the health of the financial markets is improving, as it suggests banks are enjoying improved funding conditions.
But other observers warn of possible problems further down the line if it emerges that only banks in the stronger core countries such as Germany repay the loans, while banks in still vulnerable, peripheral countries -- such as Spain and Italy -- could become "stigmatised" if they do not repay.
The ECB did not provide any details as to the nationality of the 278 banks which have decided to repay the cash.