Spanish bank borrowing from ECB drops in February

, Comments 0 comments

Spanish banks slashed their borrowing from the European Central Bank in February, the Bank of Spain said Monday, in a sign of renewed market confidence in their financial health.

Borrowing from the ECB by the country's banks during the month plunged 35.5 percent from February 2010 to 49.2 billion euros ($68.7 billion), falling below the 50 billion euro mark for the first time since 2008.

The figure was down 7.4 percent from January 2011.

The Madrid stock market was up sharply Monday, gaining 2.17 percent by 10:45am (0945 GMT), boosted by banking shares.

The amount borrowed from the Frankfurt-based ECB fell in August last year for the first time since April. That trend continued in September, October and November. The figure rose slightly in December, but again dropped in January.

The declines 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.

Spanish banks now account for about 13 percent of the total amount loaned by the ECB in the eurozone, compared to 30 percent in June and July last year.

The latest borrowing cut was viewed as a further sign that Spanish banks were finding it easier to meet their funding needs on the markets.

Spain is struggling to emerge from an economic crisis that began in late 2008 and to convince nervous markets it will not require a Greek- or Irish-style bailout.

In a setback to the government's efforts to quell such fears, Moody's on Thursday downgraded the country's credit rating by a notch to "Aa2" with a negative outlook and warned it may do so again.

But the Bank of Spain hours later announced that the banks will need just 15 billion euros to clean up their balance sheets, less than the government's ceiling 20 billion euros and well below the predictions of experts.

© 2011 AFP

0 Comments To This Article