ECB lends $575 million to eurozone banks

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The European Central Bank said on Wednesday it lent $575 million (418 million euros) to two eurozone banks this week in a sign the banks are having difficulty in obtaining dollar funding via the markets.

The ECB did not name the banks concerned, but it is the first time for a month that banks in the region have taken advantage of the facility, which the central bank operates with the US Federal Reserve.

The banks borrowed the funds at an interest rate of 1.1 percent, higher than they would have paid in commercial markets.

Dollar funding costs have risen in recent days amid worries Greece could default on its debt.

The ECB lent $500 million to a single bidder under the facility on August 17.

Both amounts remain relatively modest compared with the $9.2 billion borrowed by banks in May 2010.

© 2011 AFP

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