Business

ECB provides 530bn euros of cheap loans for banks

  • 29 February 2012
  • From the section Business
Euro sculpture outside of the ECB headquarters in Frankfurt
The ECB hopes the loans will ease the eurozone debt crisis

The European Central Bank (ECB) has provided a further 530bn euros ($713bn; £448bn) of low-interest loans to 800 banks across the European Union.

It is the second time the ECB has offered such three-year loans and comes after 489bn euros was lent in December.

The loans are aimed to help continue to ease the eurozone debt crisis, and help banks improve their liquidity.

They have also helped countries such as Italy, as some banks have used the bonds to buy government bonds.

'Unprecedented expansion'

Although the ECB has not revealed which banks have taken part, UK lender HSBC confirmed to the BBC that it had borrowed about £350m.

Lloyds Banking Group also confirmed that it had drawn £11.4bn.

The markets appear to have welcomed the announcement, with banking shares rising strongly.

In Germany, shares in Commerzbank were up 3.6% while Deutsche Bank was 1.7% higher.

Credit Agricole saw the biggest gains in France, climbing 4.5%, followed by Societe Generale, which rose 2.3%.

In the UK, shares in Barclays were up 1.7%, while HSBC added 0.6%.

Commentators said that the amount of money lent, and the number of banks which had taken part, was in line with expectations.

Banking analyst Luca Cazzulani of Unicredit said: "This will increase the level of excess liquidity pretty sharply, which is ultimately positive or very positive for risk trades.

"Italian and Spanish bonds are likely to benefit from this and equity markets as well."

BBC business editor Robert Peston said the central bank's move represented "a massive, perhaps unprecedented, expansion of the ECB's balance sheet".

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