FRANKFURT: Banks will repay the European Central Bank 61.1 billion euros ($80.8 billion) in the second of two three years loans they took from the ECB a year ago, opting to hand back the money in a sign that at least parts of the financial system are returning to health.
The ECB said on Friday 356 banks had decided to repay funds from the second loan at the earliest opportunity, on Feb. 27. A total of 800 banks tapped the operation in February 2012.
A Reuters poll on Monday estimated banks would return 130 billion euros of the second round of cheap loans, so-called LTROs (long-term refinancing operations).
The ECB lent banks a total of more than 1 trillion euros in twin 3-year, ultra-cheap lending operations in December 2011 and February 2012 a ploy that ECB President Mario Draghi said "avoided a major, major credit crunch".
Last month, banks opted to repay the ECB 137.2 billion euros of the first of the twin loans at the first opportunity to so, handing more cash back early than expected, which led to higher market interest rates.
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