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ECB lends £409bn to eurozone banks
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Wednesday, 21 December 2011 19:18

 

The European Central Bank (ECB) has revealed it lent nearly 489 billion euro (£409.3 billion) to the continent's banks in a bid to boost confidence in the eurozone.

The ECB said 523 unnamed banks had taken up the loans, which will be offered on a three-year term for the first time, in the biggest liquidity operation ever for the central bank, surpassing the 442 billion euro (£369 billion) in one-year loans in June 2009.

The move boosted sentiment towards the wider sector with Royal Bank of Scotland, Lloyds Banking Group and Barclays all climbing to the top of the FTSE 100 Index.

But Martin van Vliet, analyst at ING Bank, said doubts remain over whether the money will be used to support weaker eurozone economies.

 

He said while the take-up was "massive", the number of banks involved was smaller than the 1,121 two years ago, which suggested the participating banks were concentrated in the weak periphery of the eurozone.

He said: "We doubt whether the money will be used extensively to fund purchases of peripheral debt, given concerns about mark-to-market risks and possible reputation risks."

The ECB earlier this month unleashed further emergency measures to rescue the struggling eurozone, including slashing interest rates for the second time in five weeks, to 1%, and offering more lenient terms on loans.

Press Association, photo by kasushi

 

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