The Spanish LTRO2 correlation

Long term refinancing operation 2 or liquidity injections into Spanish credit entities via the European Central Bank rose in February to €152.432 billion from €133.177 in January. But, contrary to what most European banks seem to be doing, that is, parking capital in the central bank’s deposit facility, Spain’s banks prefer to take advantage of the rate gap and let slip in profits by purchasing sovereign debt.

Bond holdings have increased in €50 billion between November 2011 and last January. Analysts at Ahorro Corporación Financiera illustrate the correlation with these simple charts, and add that figures are in line with those in mid-2010.

About the Author

Victor Jimenez
London contributor at thecorner.eu, reporting about the City and the Eurozone economies. He regularly writes for Spanish newspaper group Prensa Ibérica--some of his features include shared work with journalists of The Daily Telegraph and the BBC.

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