The European Central Bank said banks will repay 1.94 billion euros ($2.5 billion) of three-year loans next week.
Seven banks will return 1.57 billion euros borrowed in the first of the so-called Longer Term Refinancing Operations, and 15 will hand back 371 million euros of the second offering, the Frankfurt-based ECB said in a statement today. That takes the total amount of money repaid early to 237.7 billion euros, or 23 percent of the overall lending.
The ECB flooded financial markets with three-year loans totaling more than 1 trillion euros a year ago after banks stopped lending to each other because of Europe’s debt crisis. Banks now have the option of repaying the loans, which were offered at the average of the ECB’s benchmark rate over their duration.
The central bank this month cut its forecasts and predicted the 17-nation euro economy will shrink 0.5 percent this year before growing 1 percent in 2014. The fact that banks have started paying back the loans is a “positive sign” of economic stabilization, ECB Executive Board member Joerg Asmussen said on March 18.
The central bank still allows banks to borrow as much money as they want against eligible collateral for periods of one week, one month and three months. Its monetary policy “will remain accommodative for as long as needed,” President Mario Draghi said this month.
To contact the reporter on this story: Stefan Riecher in Frankfurt at email@example.com
To contact the editor responsible for this story: Craig Stirling at firstname.lastname@example.org