Banks to return 3.012 billion euros of crisis loans to ECB next week

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FRANKFURT (Reuters) - Banks will return 3.012 billion euros (2.46 billion pounds) in crisis loans to the European Central Bank next week, more than expected and accelerating the drain of extra cash out of the euro zone financial system.

The amount banks will repay on March 5 beat this week's repayments of 2.845 billion euros and is more than the 2.0 billion forecast in a Reuters poll. (ECB/REFI)

The speed with which banks repaid the long-term loans they took from the ECB in late 2011 and early 2012 to ride out a credit crunch accelerated towards the end of last year, which was the cut-off point for an ECB snapshot of banks' balance sheets that it will assess this year.

In the run up to the so-called asset-quality review, banks shed assets, such as loans, and ECB Executive Board member Benoit Coeure warned earlier this month of another wave of deleveraging once results were known.

With banks repaying ECB crisis loans, the amount of excess liquidity, the amount of money banks have beyond what they need for their day-to-day operations, is falling.

It stood at 119 billion euros on Friday, far below its peak at around 800 billion euros in early 2012.

Coeure said market participants were learning to adapt to such an environment, "learning their way back to normality".

On Friday, the ECB said two banks would repay 510 million euros from the first LTRO on March 5, and five banks would pay back 2.502 billion from the second LTRO.

http://www.reuters.com/article/2014/...2D430020140228