ECB says banks borrowed 57 bln euros in year-long loans

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The European Central Bank said Wednesday a total 181 banks applied to borrow 56.9 billion euros ($79 billion) via its recently revived year-long loan facility, much less than in earlier operations.

At the beginning of October, the ECB said it would revive the 371-day loan facility, which it last used at the end of 2009, as a way of beefing up its armory of "non-standard" measures to help out cash-strapped banks.

Back then, as many as 1,100 banks borrowed 442 billion euros in the first of three similar operations conducted in 2009.

"I suppose it's encouraging that demand wasn't very strong" this time round, said Capital Economics analyst Ben May.

But that did not necessarily signify an easing of tensions on the interbank money markets just yet, the expert cautioned.

"Banks will be under pressure in the coming months" owing to the recapitalisation plans of Europe's leaders, he said.

At its regular monthly policy-setting meeting on October 6, the ECB's governing council unveiled a range of new measures to help eurozone banks with additional liquidity in a bid to avert a possible credit crunch in the single currency area.

In addition to its regular refinancing operations, the euro bank said it would conduct two longer-term refinancing operations, one with a maturity of approximately 12 months in October and the other with a maturity of approximately 13 months in December.

© 2011 AFP

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