ROME: Big Italian banks are expected to take up the bulk of longer-term cheap funds offered by the European Central Bank this week, as a recovery in the domestic economy encourages them to lend more, according to figures provided by banks and compiled by Reuters. Data collected from 14 large Italian lenders showed they requested an overall 32 billion euros ($34 billion) at TLTRO tender.
That compares with a total take-up of 40 billion euros estimated by analysts in a Reuters poll.The top two banks alone, Intesa Sanpaolo and UniCredit, are set to request up to 17 billion euros. We believe that participation in the operation is likely to be driven by intentions to lend to the real economy and expectations for increased loan demand from corporates,”
Barclays analysts said in a report. The ECB is offering banks the four-year loans at almost zero cost as one of its measures to add around 1 trillion euros to its balance sheet, in an effort to stave off deflation. However, lenders took up just a modest amount of the loans in the first two offerings last year, a sign they lacked confidence in the euro zone economy. That added to pressure on the ECB to start buying government bonds, which it did this month. Italian banks have taken a total of 49 billion euros out of 212 billion euros given out at the first two tenders. The third tender, whose results will be announced on Thursday, is also expected to be small — the most generous estimates by analysts are 50 billion to 60 billion euros making the expected take-up by Italian banks all the more significant.
