Spanish bank borrowing from ECB drops for fourth month

14th December 2010, Comments 0 comments

Spanish banks slashed their borrowing from the European Central Bank for the fourth month running in November, the Bank of Spain said Tuesday in a sign of renewed market confidence.

Borrowing by the country's banks during the month fell 22.6 percent over the November 2009 figure to 61.1 billion euros (81 billion dollars), its lowest level since January 2009, the central bank said.

The amount was down by 10 percent from October 2010.

The amount borrowed from the Frankfurt-based ECB fell in August this year for the first time since April. That came after Spanish banks tapped the ECB for record amounts in June and July as the country came under pressure on the markets in the fallout from the Greek debt crisis and rescue.

The deputy chairman of the Bank of Spain, Javier Ariztegui, said in June that Spanish banks since April had been forced to seek more liquidity from the ECB due to nervousness in the markets over the country's economy.

Spanish banks currently account for about 15 percent of the total amount loaned by the ECB in the eurozone, compared to 30 percent in June and July.

The latest borrowing cut was viewed was a further sign that Spanish banks were finding it easier to meet their funding needs on the markets following the release of stress tests at the end of July that showed the country's banking sector as largely healthy.

All eight major Spanish banks passed the EU's bank stress tests on their ability to weather a crisis although five out of 19 regional lenders failed.

© 2010 AFP

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