Dovishness Dominates ECB’ s Meeting
UBP | Unsurprisingly, the ECB kept its monetary policy unchanged. Corporate bonds buying are going to start on June 8th and the TLTRO on June 22nd.
TLTRO
Spanish Banks Likely to Avoid the “Swiss rate” scenario
UBS | President Draghi surprised the market positively, both in terms of the magnitude of some of the expected moves (QE extension in the upper end of the range) and also implementing new measures (acquisition of non-financial IG bonds in its asset purchases, and new targeted TLTRO). For (retail) banks like the Spanish, the balance of ECB’s actions has to be considered as positive, especially if trends seen in the swap market are confirmed in Euribor fixings.
TLTRO 2: Poor results highlight ECB’s increasingly large to do list
MADRID | The Corner | As expected, the impact of the ECB’s second TLTRO, aimed at spurring credit to SMEs, was smaller than expected. Eurozone banks asked for €129.8 billion ($161.29 billion) in four-year loans, more than the nearly €83 billion provided in the previous offer in mid-September, but below the €150 billion expected by market watchers. Some believe this will increase pressure on Frankfurt to launch broadened QE on 22 January, the scheduled date for the next ECB meeting.
December TLTRO: A window on the ECB’s future actions
By Giuseppe Maraffino (Barclays) | On Thursday, December 11, the ECB will carry out its second TLTRO. The allotment results will be out at about 10:15 London time. The size of the new liquidity injected will be clear on the settlement of the operation, on Wednesday, 17 December, which is also the settlement day of next week’s MRO and of the weekly 3y LTRO repayment. However, the announcement on Friday, December 12, of next week’s 3y LTRO repayment will provide some insights on the new liquidity injected.
Next TLTRO may reach €160 billion
MADRID | The Corner | All markets eyes are set on the ECB’s second offer of cheap four-year loans (TLTRO), which will take place next Thursday and are aimed to revive the eurozone’s battered economy and try to boost lending to SMEs. As a matter of fact, this second round will be important as any decision about launching a QE program will be influenced by how the banks respond to Thursday’s liquidity open bar.
Silent whispers: Do murmurings of disaffection within ECB point to mounting obstacles for Draghi?
MADRID | By Ana Fuentes | Was Mario Draghi reckless to announce an ECB balance sheet expansion target? According to Reuters, some of his colleagues at the central bank are particularly aggrieved about a perceived “ secretive management style and erratic communication” and they will apparently “urge him to act more collegially”. Could this leak be the beginning of a larger problem for the ECB chief? The bank was unwilling to comment on Wednesday.
Europe needs tail wing- ECB willing to open windows
MADRID | By Jaime Santisteban | After successive quarters of economic expansion, increased demand and rises in industrial production which had triggered widespread optimism, the economic recovery has lost momentum in the Eurozone, halting abruptly in Q2. That was the main message conveyed on Monday by Mario Draghi at the European Parliament. Weak credit growth may prove an obstacle to recovery, and the continued lag in this sector is likely to persist for the rest of this year, with gradual increases in lending expected in 2015 and 2016.
TLTRO alone might not be a game changer for Eurozone credit recovery
MADRID | The Corner | Supply and demand conditions for Eurozone credit generation are improving – this is clearly reflected in the ECB’s latest Bank Lending Survey – but the way towards a full normalisation is still long. We believe that reduced bank funding costs might support, but will not aggressively accelerate, the recovery in credit growth.
How caution resulted on a weak TLTRO
MADRID | By Julia Pastor | The first TLTRO auction will not make history for its significance. Eurozone banks only asked for €82.6 billion, from which €14.147 million will go to Spanish entities (Santander €3bn; Caixabank €3bn; Popular 2.847 bn ; Bankia 2.7bn and BBVA 2.6bn), much less than the expected 100-150 billion, was firstly interpreted as a poor credit demand, although a second reading shows that lenders were right to be cautions.
EBC’s first TLTRO misses expectations
MADRID | By Julia Pastor | As expected, ECB’s September TLTRO will not make big headlines. 255 European banks borrowed €82.6bn of liquidity below consensus estimate of €100-150bn. Although the Frankfurt-based institution doesn’t provide a geographical breakdown, banks in Italy and Spain were among the leading borrowers (40% of the total) to trim funding costs. Spanish entities are thought to have asked half of those €30bn at their disposal, although some entities “are not willing to disclose how much they asked for,” an ECB source confirmed to The Corner.