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Jun 02, 2020 PRINT EDITION

FRANKFURT: Euro zone banks will repay 3.1 billion euros ($3.5 billion) of ultra cheap funding to the European Central Bank early, returning only a fraction of their borrowings ahead of schedule, the ECB said on Friday.

Banks borrowed over 700 billion euros in four-year targeted longer-term refinancing operations in 2016 and 2017, and most now hold onto the loans as ECB cash remains among the cheapest sources of funding.

While banks have an option to repay these funds at certain intervals, repayments have been small and banks are instead lobbying for the ECB to roll over the loans before they near maturity.

Copyright Reuters, 2018