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11 Dec 2014
Banks’ take up in TLTRO unlikely to increase ECB’s balance sheet – Danske
FXStreet (Barcelona) - The Danske Bank Research Team notes that banks’ take-up of EUR130bn in TLTRO is unlikely to be enough the increase the balance sheet of ECB sufficiently.
Key Quotes
“Banks' take-up in the December TLTRO was EUR130bn, which implies the total for the first two TLTROs was around EUR210bn out of EUR400bn eligible (7% of the total amount of eligible loans outstanding in April 2014). This was in line with our expectations, but probably lower than the ECB had hoped for.”
“The take-up in the TLTRO will increase the ECB's balance sheet, but the net impact will be unknown until tomorrow, where the repayment of the 3Y LTRO is announced. It will then become apparent whether the take-up is a roll-over of the current 3Y LTRO. The effects on excess liquidity and money market rates are also dependent on both the take-up in the December TLTRO and the repayment of the 3Y LTRO, as they both settle on Wednesday next week.”
“Without a broadening of the ECB purchases, the TLTRO would have been the main contributor to the expansion of the ECB's balance sheet towards the intended EUR3tr. However, the figure released today shows that the current measures are unlikely to be enough to increase the balance sheet sufficiently. This also holds when the available liquidity on the remaining TLTROs is included.”
Key Quotes
“Banks' take-up in the December TLTRO was EUR130bn, which implies the total for the first two TLTROs was around EUR210bn out of EUR400bn eligible (7% of the total amount of eligible loans outstanding in April 2014). This was in line with our expectations, but probably lower than the ECB had hoped for.”
“The take-up in the TLTRO will increase the ECB's balance sheet, but the net impact will be unknown until tomorrow, where the repayment of the 3Y LTRO is announced. It will then become apparent whether the take-up is a roll-over of the current 3Y LTRO. The effects on excess liquidity and money market rates are also dependent on both the take-up in the December TLTRO and the repayment of the 3Y LTRO, as they both settle on Wednesday next week.”
“Without a broadening of the ECB purchases, the TLTRO would have been the main contributor to the expansion of the ECB's balance sheet towards the intended EUR3tr. However, the figure released today shows that the current measures are unlikely to be enough to increase the balance sheet sufficiently. This also holds when the available liquidity on the remaining TLTROs is included.”