Euro zone banks to repay 32 billion euros of TLTRO funds before new tender

FRANKFURT (Reuters) - Euro zone banks will repay 31.8 billion euros worth of ultra-cheap central bank loans early, the European Central Bank said on Friday, just days before it launches a fresh tender for cheap loans.

Although the repayments reduce the central bank's balance sheet, much of these funds are expected to be rolled over into the new facility, which will essentially lock in the funding for another three years.

The ECB on Thursday improved conditions for its new targeted longer-term refinancing operations, offering the cash for three years instead of the planned two and giving it to banks for as little as the minus 0.5% deposit rate.

(Reporting by Balazs Koranyi; Editing by Catherine Evans)