The Slovenia Times

Slovenian Banks Take Up EUR 631M in ECB Auction


Eurozone banks took EUR 129.8bn out of the more than EUR 300bn offered by the ECB in the second auction as part of what is called Targeted Longer-Term Refinancing Operations (TLTRO), which less than EUR 150bn expected by analysts.

Banka Slovenije says the involvement of Slovenian banks in the second auction was greater by the number of banks as well as by the volume of loans taken.

The initial volume for each bank for the first two auctions was determined relative to the volume of lending to companies and households in the euro zone without retail housing loans as of late April 2014.

Through the auctions the banks secured extra long-term finances to lend to businesses, but Banka Slovenije says that lending activity will also depend on other factors, including corporate leverage and concrete projects.

The central bank said it could not reveal data on the number of banks participating in the auction, but some of the banks have disclosed how much they took.

Unicredit Banka Slovenija, the subsidiary of the Italian banking group, got the targeted EUR 78m, which the bank said it would use to lend to the real sector and to stimulate business activity at the local level.

The Austrian-owned Hypo Alpe Adria bank confirmed for the STA its participation in the auction at the amount of "several ten million euros", which is to go to step up crediting activity.

The Slovenian postal bank, owned by the NKBM bank, confirmed it had taken part in the second auction without specifying the sum, saying the funds would go toward "crediting the existing and potential new clients".

Banka Koper, which is part of the Italian Intesa Sanpaolo group, said it had not taken part in the auction, while the state-owned Abanka Vipa and NKBM banks would not reveal whether they participated or not.

Commenting on the fact that the overall take-up at today's auction was below the expectations, analyst Primož Cencelj assessed for the STA that the "likelihood of quantitative easing has increased considerably".

"What is more, I believe a bigger investment package is needed in Europe than the one proposed by European Commission President Jean-Claude Juncker at the amount of EUR 300bn," Cencelj said

His colleague of Alta Invest Matej Šimnic believes that the weak demand should not have come as a surprise, noting that the European periphery remains very weak, coupled with the negative impact of the situation in Russia.

"The ECB's mandate is harder with every measure, while there is also a high likelihood that potential new purchases of state bonds that are being mentioned in the public would not achieve its goal," Šimnic said, expressing doubt the purchases would take place at all.

He believes the ECB's measures would have to be much more targeted and should mainly aim for smaller companies, but he also says that without taking a greater share of the risk, the ECB would be hardly able to convince banks into a more aggressive lending policy.


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