Bloomberg News

Bank Lending Stress Approaches 7-Week High in Euro Money Markets

November 26, 2012

European banks’ reluctance to make unsecured loans to one another rose to near the highest in seven weeks, according to a money-market indicator.

The difference between the euro interbank offered rate and overnight indexed swaps, known as the Euribor-OIS spread, was 12.6 basis points at 8:20 a.m. in London from 12.5 on Nov. 23, data compiled by Bloomberg show. The measure reached 12.75 on Nov. 23, the highest since the start of October.

The cost for European banks to borrow in dollars was little changed with the three-month cross-currency basis swap at 27.5 basis points below Euribor. The one-year basis swap was unchanged at 28.5 basis points below Euribor. A basis point is 0.01 percentage point.

The European Banking Federation’s euro overnight index average, or Eonia, of unsecured lending deals was set at 0.074 percent on Nov. 23 from a record low 0.071 percent the day before. The Eonia swap, an estimate of average overnight borrowing costs over the next three months, was little changed at 6.4 basis points.

Lenders increased overnight deposits at the European Central Bank on Nov. 23 to 234 billion euros ($303 billion) from 229 billion euros the day before.

To contact the reporter on this story: Katie Linsell in London at klinsell@bloomberg.net

To contact the editor responsible for this story: Paul Armstrong at parmstrong10@bloomberg.net


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