Europe’s biggest banks are preparing to return a third of the cheap three-year funding they recently borrowed from the European Central Bank as early as this year.
Senior bankers said Italy’s UniCredit, France’s BNP Paribas and Société Générale, and La Caixa in Spain are preparing to pay back up to a third of the loans– estimated at €80bn-€100bn in total – within the next 12 months.
The longer-term refinancing operation, or LTRO, has been widely hailed as the defining policy measure by Mario Draghi, the ECB president, which stabilized jittery eurozone markets. The unprecedented scheme, launched last December and repeated in February, gave hundreds of banks an aggregate €1tn of ECB money at an interest rate of just 1 per cent.
The money is repayable in December 2014 and February 2015. But under the rules of the operation, banks are allowed to begin repayment after the first 12 months – in December this year, according to Financial Times.