Eurozone banks increase use of special ECB facility
Banks have increased use of the European Central Bank's marginal lending facility, taking it to three-month highs in a possible sign of growing tensions on interbank lending markets, ECB data showed Thursday.
Commercial banks borrowed 4.06 billion euros ($5.75 billion) for a day from the ECB on Wednesday, up from just 147 million euros on Tuesday, at the facility's stiff rate of 2.25 percent.
This was the highest level since May 10, when banks borrowed 4.56 billion euros and came as financial markets worldwide were in turmoil on concerns the US and eurozone debt crisis will bring a new recession, with the banks posting savage losses.
The ECB's refinancing rate, which serves as a benchmark for banks lending among themselves, currently stands at 1.50 percent.
The rise in use of the marginal lending facility on Wednesday, with figures published the next day, suggested that markets had become tense on rumours that Societe Generale faced problems because of its exposure to Greek debt.
The French bank swiftly denied the rumour but its shares fell 14.74 percent on Wednesday before losing an additional five percent by midday in Paris on Thursday after a sharp opening bounce ran out of steam.
© 2011 AFP