The first bar open free liquidity by the European Central Bank (TLTRO, for its acronym in English) to try to revive lending to SMEs and households were closed yesterday in Frankfurt without registering drunkenness among 383 financial institutions invited to a feast 400,000 million at a rate of only 0.15%. All the red carpet for the bank that ended in “disappointment”, according to the consensus of all international analysts. ECB Official data indicated that the first of two megasubastas to be held this year (the second will be on 11 December) concluded with a request of 82.600 billion by 252 entities (150,000 were predicted). Of these, around 15,000 Spanish banks, as is clear from the data provided by the institutions-information is private and not facilitó- ECB.
Yesterday, the institution you head Mario Draghi gave the go-ahead to a new phase in the career of a Germanized ECB so far and used to stand idly by. Everything is much worse than expected, no back-the Eurozone growth forecasts and inflation, far below the 2% limit, have been revised and a low ‘Super Mario’ has been convinced that the magic of his words and not enough to calm markets. Since June, it has dropped twice interest rates to leave the historical 0.05%, has penalized as many times the deposit facility, has announced a massive purchase of securitization and approved for this year hosing 400,000 million expandable a trillion euros in successive auctions planned in 2015 and 2016
This liquidity at ridiculous rates that are put up yesterday was approved in June. An operation of long-term funding for a specific purpose that has a precedent.
occurred in late 2011 and early 2012, when the credit tap was closed, the interbank market was nonexistent and risk premiums were fired. Draghi placed two bars liquidity to entities requesting flocked over a trillion-the Spanish banks captured around 40% of the volume. However, ‘Super Mario’ did not achieve its goal: extend credit to SMEs and households. The entities used it to do business, save their balances and incidentally, give oxygen to the European National Treasures of South sovereign debt buying a practice called ‘carry trade’-. Now, at least in theory, everything will be different because entities are required to transfer the money collected to the circuits of the real economy. Hence the two injections in 2011 and 2012 LTRO be called, and now TLTRO (the ‘t’ initial is ‘targeted’, something like ‘targets’).
The Most
Nevertheless, the penalty imposed is very light. Banks should not pay back the money collected during 2016, two years ahead of schedule anything else.
December, the key
After yesterday’s auction, 318,000 million remaining available to be ‘onsale’ on December 11. “It will be the date that marks the success and failure of TLTRO. The concern in December would see a final sum of money awarded well below the 400,000 million, which would mean that the bank is not solvent demand for funding, “warns Joaquín Maudos, Professor of Economic Analysis. Regarding shown little appetite for European banks yesterday, as part of the impending results of stress tests carried out by the ECB-the banks want to get handsome in the photo and “the lack of effective demand for profitable projects.”
In addition, Draghi has yet to explain and detail the program -characteristics securitization volume …-. This will not happen until early October, hence banks have preferred to wait, knowing that the appointment December winning horse is play-every entity has already awarded the money you can borrow, corresponding to 7% of the total balance hipotecarios- excluding credits.
A policy, Draghi, who also has detractors. “The results show how much ‘give’ money does not serve to stimulate lending. On the contrary: the more abaratas money, the greater the sense of risk premiums although countries are in tatters. Banks do not know how much their assets are worth. I do not even know if they have enough capital to withstand the times to come, “says Javier Santacruz, economist and researcher at Britain’s University of Essex.
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