“ECB’s €500 Billion Payoff Puts Italian Banks in the Firing Line”
June 14, 2023
“The European Central Bank is about to test the resilience of the continent’s banking industry by making lenders repay about half a trillion euros in cheap pandemic-era loans — in one go…
As €476.8 billion of TLTRO loans come due on June 28, specific firms in Germany, France or other euro-zone nations could also feel the pinch, according to Reinhard Cluse, an economist at UBS Group AG. “In Italy or Greece, the aggregates are clear,” he says. “But even in other countries, there could be banks that borrowed in excess of their reserves at the ECB.”…
Italian banks may need to raise about €35 billion in 2023, and another €75 billion to prepare for more TLTRO loan repayments next year, according to estimates from NatWest Markets. “Some institutions, most likely the smaller banks, will be short cash even in the short term,” Joann Spadigam and other NatWest strategists wrote in a note to clients…
Analysts doubt that the ECB would introduce a new facility to tide banks over, even if they did find themselves locked out of private funding markets. Most economists polled by Bloomberg this month said they didn’t expect the ECB to offer fresh longer-term funding after TLTRO’s demise…”
https://finance.yahoo.com/news/ecb-500-billion-payoff-puts-040000535.html