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European banks snap up cheap loans from ECB

European banks snap up cheap loans from ECB

Category: Banking

Updated: 14/12/2012
First Published: 29/02/2012

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Banks from across the continent have snapped up cheap loans provided by the European Central Bank (ECB).

The ECB made £530 billion (€448 billion) worth of three-year low interest loans available to banks in the European Union.

Eight-hundred banks have taken advantage of this latest injection of funding.

It is understood that banks are free to pay back all of their loans or parts of them at any point after a year.

It is the second such initiative in three months, after €489 was lent to 523 European banks in December 2011.

The value of both the funding initiatives is worth more than €1 trillion.

No specific details on which banks have taken part have been released by the ECB, but the BBC is reporting that HSBC has borrowed around £350 million.

Shares in the bank rose slightly after the news, while Barclays also saw an increase, with other banks across Europe also seeing the value of their shares boosted

Institutions have been under pressure to build up their cash reserves after more stringent rules were introduced to help banks prevent another financial crisis.

Banks have been told they must have more funds to hand in case of a run on funds – a scenario like the one seen in 2007 at Northern Rock where customers rush to withdraw their cash.

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