FRANKFURT, Dec 3 (Reuters) - Italy will lose a smaller share in the capital of the European Central Bank than some had feared, suggesting that the long-awaited review of the ECB’s shareholder structure will only have a limited market impact.
Once a largely symbolic figure, the shareholder structure or so-called capital key now carries greater significance because the ECB divides its purchases of government bonds based on each country’s share.
Italy’s share will fall by about 0.5 percentage point to 16.95 percent if only euro zone members are included, even as some market players predicted a loss twice as large.
Spain’s share will drop by an even bigger margin, 0.6 percentage point to 11.98 percent, with Germany benefiting the most as its share rises by 0.8 percentage point to 26.38 percent.
The shareholder structure is re-calculated every five years based on the size of each country’s economy and with southern countries lagging behind in the recovery, they were always expected to lose some of their share.
Still, this creates the paradoxical situation of the ECB having to reduce support for countries who may need it more than northern peers.
Although the ECB plans to end the purchase of new bonds at the end of the year, it will continue to reinvest cash from maturing debt for an extended period.
It is expected that such reinvestments will be done along the new capital key but policymakers are still debating how quickly they should shift to the new figures.
Policymakers speaking on condition of anonymity recently said that they were considering a transition period and aim to be market neutral in their decision.
Although the ECB only buys euro zone bonds, all EU members have a share in the bank so an irregular review of the capital key is likely for next year when Britain leaves the bloc and the Bank of England loses its shareholding.
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here (Reporting by Francesco Canepa and Balazs Koranyi, Editing by Alison Williams and Ed Osmond)