A European Central Bank measure
designed to stimulate the flagging eurozone economy has seen a low initial
take-up by banks.
The cheap loans for European banks have been designed to encourage lending to
business. But out of total loans of 400bn euros (£315bn) available on Thursday, only
82.6bn was taken up by 255 banks.
However, banks may be waiting for separate ECB measures due in October,
analysts said. Cheap loans to banks were part of a package announced in June designed
to support lending and the economy.
The loans - called "targeted longer-term refinancing operations" (TLTROs) -
see the banks pay 0.15% annual interest for up to four years. Money market traders had been expecting banks to take up between 100bn and
200bn euros of TLTROs this week, with further interest in December, when banks
get a second chance to apply for the cash. Banks may be wary of taking up the loans before imminent ECB-led
health-checks of the banking sector, said Karel Lannoo, chief executive of
Brussels think tank the Centre for European Policy Studies.
"The European financial sector continues to be weak," said Mr Lannoo. "There
may be a stigma because the markets are waiting for the AQR (asset quality
review) in a few weeks."
However, banks may be waiting for details of a separate ECB programme to buy
asset-backed securities, which are due out in October. "We would warn about drawing too strong conclusions from the September
round," said ABN Amro analyst Nick Kounis.
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