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Banks to pay back ECB crisis loans

Banks to pay back ECB crisis loans
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The European Central Bank says it is about to receive repayment of more than 130 billion euros of crisis loans that it made to the region’s lenders.

The cash being handed back earlier than expected is a sign that at least parts of the financial system are returning to health.

The ECB made over one trillion euros of ultra-cheap three-year loans to banks in twin lending operations at the end of 2011 and early last year.

At the time ECB President Mario Draghi said by doing that they had “avoided a major, major credit crunch”.

Some banks are keen to repay early to impress investors and rating agencies and distance themselves from more cash-strapped rivals.

This will be welcomed by a number of ECB policymakers who were concerned about the increased risks to the central bank’s balance sheet from these loans.