June 12, 2020 / 10:13 AM / a month ago

Euro zone banks to return 214 bln euros to ECB ahead of key loan tender

FRANKFURT, June 12 (Reuters) - Banks in the euro zone will repay 214 billion euros ($242 billion) of European Central Bank funding early, the ECB said on Friday, probably to roll the cash into a new facility at even more favourable terms.

The ECB will offer a three-year loan called a targeted longer-term refinancing operation (TLTRO) on June 18 with a rate as low as minus 1% if banks then loan the cash onto the real economy.

Market expectations for take up in next week’s tender are around 1.4 trillion euros, ECB board member Isabel Schnabel said earlier, making it by far the ECB’s biggest single lending operation, although over half of this could be cash rolled over from various existing ECB facilities.

TLTROs, around for years to provide liquidity to banks, were redesigned earlier this year to keep cash going to euro zone firms during the currency bloc’s pandemic-induced recession.

1 = 0.8834 euros Reporting by Balazs Koranyi; Editing by Catherine Evans

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