FRANKFURT (MNI) – Only 24 banks participated in the European
Central Bank’s first competitive lending operation since the start of
the crisis in late 2008.
Despite the limited uptake of just under E5 billion compared to an
indicative offering amount of E15 billion, the weighted average rate was
1.15% and thus notably higher than the minimum bid rate of 1% and
yesterday’s 3 month Libor rate of 0.5875%.
This was despite the fact that the ECB had assured that “allotment
amounts in these operations will be set with the aim of…avoiding any
significant spreads between bid rates and the prevailing MRO rate.”
After reaching its highest level since March 17, traders expect the
three month interbank rates to shoot up further as the Greek crisis
makes the US increasingly reluctant to fund European Banks.
The readiness of a small number of banks to pay such a premium may
signal that some Eurozone banks indeed are cut-off from the market.
–Frankfurt Newsroom +49 69 72 01 42: email: frankfurt@marketnews.com–
[TOPICS: M$X$$$,M$$EC$]