Photo: AP/Michael Probst
Analysts are buzzing about expectations for the European Central Bank’s second three-year long-term refinancing operation, and they’re diving from the enthusiasm we saw about a month ago.Once again, Spanish and Italian banks in particular will likely ask the central bank for billions in cheap funding, but earlier speculation that the take-up could amount to as much as €1 trillion—well above the €489 billion ($650 billion) they asked for last time around has been scaled back.
That take-up includes both new money banks ask for from the central bank and existing, shorter-term loans from the ECB that can be rolled over to a three-year maturity.
A handful of recent expectations from the street:
Morgan Stanley (note out yesterday): €200-500 billion
Analysts polled by Reuters (from that MS note): €470 billion
UBS (via FT): €492 billion (with €300 billion in new money)
Citi (note out today): €400-500 billion
Standard Chartered (via CNBC): €500-750 billion
Photo: @scottybarber on Twitter
The LTRO has staved off a lot of the more immediate pressures on banks, particularly in countries like Italy and Spain, however it is still unclear whether much of that funding is being filtered back into the eurozone economy.If that doesn’t happen, credit will continue to tighten in the souring economic climate, particularly in Italy and Spain.