MILAN: The take up of cheap European Central Bank funds by Italian banks at next week's three-year tender is likely to be substantial, the director general of Italy's banking association (ABI) said on Saturday.
"I expect a wide recourse," Giovanni Sabatini told Milano Finanza newspaper in an interview.
Italian banks are expected roughly to match previous demand for ECB funds at the new three-year tender on Feb. 29 after grabbing almost a quarter of the total at the first such offer, a Reuters poll showed.
The ECB wants the tender to be the last one as some policymakers worry banks may become too reliant on the central bank's liquidity injections.
"The first quarter of the year is demanding as regards state and bank bond maturities," Sabatini said.
In December the ECB assigned a total of 489 billion euros at the tender, of which 116 billion euros were taken up by Italian banks.
Sabatini noted the European Banking Authority (EBA) had already announced it would reconsider demands on bank capital buffers if sovereign bond spreads fell and Europe's rescue fund was strengthened.
"We now expect it to keep its word," he said.
EBA has asked European banks to boost their capital base by a combined 115 billion euros. In September it asked lenders to mark to market certain assets including sovereign bonds.
Since then sovereign bond yields of troubled euro zone peripheral countries have fallen.
Italian banks have to boost their capital by a total of 15.4 billion euros to meet EBA requirements.
On February 11, EBA Chairman Andrea Enria was quoted as saying if the ongoing narrowing of sovereign debt spreads was of structural and lasting nature, it could consider reviewing the sovereign buffer.
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