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Better demand for ECB TLTRO seen in December, but short of total - Reuters poll

Published 17/11/2014, 13:59
Better demand for ECB TLTRO seen in December, but short of total - Reuters poll

(Reuters) - Banks will borrow just 145 billion euros from the European Central Bank when it offers a second tranche of cheap loans in December, but the ECB won't sweeten the deal to make it more attractive, a Reuters poll of traders found.

Demand for the December operation will be better than at the first offer of the new loans in September, when banks took just 82.6 billion euros, but will still leave almost half the roughly 400 billion euros available across both operations untapped.

In a similar poll last month, traders had expected banks to take 175 billion euros at the December operation.

Although the poll consensus is now for lower demand, 18 of 20 euro money market traders polled did not expect the ECB to sweeten the terms of the December operation to make it more appealing to banks. The remaining two traders expected the central bank to ease some of the terms.

The survey also showed the ECB is expected to allot 95.0 billion euros at its regular weekly tender, less than the 98.4 billion euros maturing this week.

The poll showed banks are expected to return another 3.5 billion euros of the ECB's old crisis loans, more than the 1.95 billion euros they will repay this week.

The ECB has taken various policy steps this year to help fuel growth in the euro zone and lift inflation back towards its near 2 percent target, but is increasingly expected to have to launch a sovereign bond purchase programme as well.

"Everything the ECB is doing, it does not seem to be yielding anything," said a trader.

(Reporting by Rahul Karunakar; Polling by Hari Kishan; Editing by Catherine Evans)

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