Banks Flock to ECB Loans

European Central Bank provides record $712 bln in three-year cash.

The number of financial institutions flocking to the European Central Bank’s three-year loans soared to 800 and borrowing rose to a record in an operation that may boost the euro-area economy.

The Frankfurt-based ECB said it will lend banks 529.5 billion euros ($712.2 billion) for 1,092 days, topping the 489 billion euros handed out to 523 institutions in the first three-year operation in December. Economists predicted an allotment of 470 billion euros in today’s tender, according to the median of 28 estimates in a Bloomberg News survey.

Too Good to Refuse

Banks that shunned the first loans for reputational considerations may have concluded “it was an offer they couldn’t refuse after all,” said Martin van Vliet, an economist at ING Group in Amsterdam. The ECB’s move to encourage take-up by increasing the pool of collateral banks can use to obtain the funds also appears to have worked, he said.

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