RegionsBank Demand for ECB Loans Less than Expected

Bank Demand for ECB Loans Less than Expected

The European Central Bank (ECB) has launched the first round of its stimulus programmme aimed at getting banks to lend more to revive the eurozone economy, but the demand for cheap credit fell below expectations.

The central bank for the 18-country eurozone dispensed a total of €82.6bn (US$106.4bn/£65.2bn) in cheap loans to 255 banks. Market estimates for likely demand had ranged from around €100bn to more than €200bn.

The opening round of cheap loans is the first of eight in a programme announced by the ECB on June 4, which was followed by further stimulus measure announced two weeks ago. Both form part of a broader ECB effort to expand the amount of credit available in eurozone economies

Banks will pay just 0.15% in annual interest for up to four years for the loans, with the amount they can borrow dependent on how much they loan to companies.

The low uptake underlined the ECB’s difficulty in getting its stimulus measure through to the larger economy. Economists have suggested that the impact of the cheap loans, dubbed targeted longer-term refinancing operations (TLTROs), will be limited as companies see no reason to risk borrowing while economic growth in the region remains weak.

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