Bloomberg News

ECB Says Banks’ Overnight Deposits Increased to Record High

January 09, 2012

(Updates with strategist’s comment in fourth paragraph.)

Jan. 9 (Bloomberg) -- The European Central Bank said overnight deposits from commercial banks rose to a record.

Euro-area banks parked 463.6 billion euros ($591 billion) with the Frankfurt-based ECB on Jan. 6, up from the previous record of 455.3 billion euros set a day earlier. That’s the most since the euro was introduced in 1999.

The ECB last month loaned 523 banks a record 489 billion euros for three years to keep credit flowing to the 17-nation euro economy during the sovereign debt crisis. It loaned the money at its benchmark rate of 1 percent. The surge in deposits suggests banks are placing excess cash back with the ECB at the overnight rate of 0.25 percent, incurring a loss rather than lending it for more elsewhere.

Deposits “have to stay high, given the excess liquidity in the system,” said Laurent Fransolet, head of fixed income strategy at Barclays Capital in London. “Banks cannot do anything except redeposit, so deposit-facility usage will remain very high.”

--Editors: Matthew Brockett, Simone Meier

To contact the reporter on this story: Gabi Thesing in London at gthesing@bloomberg.net

To contact the editor responsible for this story: Craig Stirling at cstirling1@bloomberg.net


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