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Long term refinancing operations (LTROs) are open market operations the European Central Bank (ECB) uses to control banking system liquidity.

MROs are seven day refinancing operations held weekly against collateral. 

STROs are held once a month and maturity length is one maintenance period.

LTROs mature after three months, six months, 12 months and 36 months. 

The ECB's open market operation policy tools provide eurozone banks with low-interest loans. They consist of main refinancing operations (MROs), special term refinancing operations (STROs), and long term refinancing operations (LTROs).

Three-month LTROS are held monthly. The ECB's first supplementary  LTRO with a six-month maturity was announced March 2008. The €25 billion auction drew bids amounting to €103.1 billion, from 177 banks. The first tender was more than four times oversubscribed. Another €25 billion six-month tender was allotted on 9 July. The ECB has since increased the allotment from €25 billion to €50 billion, with a maximum bid amount of $5 billion

The first 12 month LTRO in June 2009 had close to 1100 bidders.

On 21 December 2011 the bank instituted a term of 3 years (36 months); 523 banks that took part in the first auction. Loans totalling €489.2 billion ($640 billion) were announced. The ECB's second 36 month auction, LTRO2, was held 29 February 2012, providing 800 eurozone banks with further €529.5 billion. Net new borrowing under the February auction was around €313 billion – out of a total of €256bn existing ECB lending €215bn was rolled into LTRO2.

A possible LTRO3 is currently being discussed.

Recent Euromoney LTRO coverage

Welcome back to the peripheral Europe credit crunch, DraghiMarch 2013

"We [Credit Suisse] do not expect the ECB to announce further LTROs at next week’s meeting [April 4], as excess liquidity in the Eurosystem is still ample (over €450bn) and banks have started to repay LTRO refunding."

Oaktree’s Marks: Opportunity in Europe not what we thought it would be

March 2013

What Oaktree Capital Management hadn’t bargained for, however, was the impact that the ECB’s two long-term refinancing operations (LTROs) would have on the distressed investing environment.

Bond markets: The threat from rising rates

March 2013

The market had expected roughly €100 billion of LTRO repayments; when banks in fact paid off €137 billion, worries set in of an imminent reduction in the short-term liquidity injections from the ECB. 

LTRO repayment sends mixed message on eurozone bank healthFebruary 2013

The European Central Bank’s announcement that 278 eurozone banks repaid €137.2 billion of their long-term refinancing operation (LTRO) borrowings on January 30 was seized upon by the market as supporting evidence for a broad range of contradictory positions.

ECB signals limits to its monetary firepower with new policy blueprintAugust 2012

European Central Bank president Mario Draghi's mooted bond-buying plan needs shock-and-awe to arrest market panic over Spain and Italy's elevated financing needs, in the absence of new fiscal resources for the EFSF/ESM.

LTRO 3 or bust, Italian bank deleveraging editionJune 2012

Without a third round of the ECB's long-term refinancing operation, Italian banks will deleverage by up to €444 billion over the next two years - triggering regional contagion if, as is likely, sovereign spreads jump.

ECB talks tough on LTRO3 

June 2012

Assumption is that central bank liquidity will keep on coming.

ECB: Don’t hold your breath for LTRO3

May 2012

ECB’s Praet says liquidity provision “a delicate balancing act” 

ECB creates structural problem 

May 2012

The ECB’s three-year LTRO, while appearing to restore banks’ access to wholesale markets, exacerbates the problem of structural subordination for bank bondholders.

LTRO collateral haircuts push encumbered eurozone banks to further boost sovereign exposureMay 2012

Substituting sovereign collateral for loans relieves encumbrance concerns; Bundesbank and Oesterreichische Nationalbank push back against programme collateral

Banking funding: LTRO – Enough already

March 2012

There is no doubt that the ECB’s December three-year long-term refinancing operation (LTRO) auction was the key factor in taking the likelihood of a liquidity-driven bank funding crisis off the table in Europe.

ECB's LTRO means more holding of funds and less lending

March 2012

The terms and longer duration of the LTRO have the potential to seriously interfere with the European debt capital markets, says lawyer.

Intesa returns to LTRO funding 

February 2012

Peripheral banks prefer to fund cheaply from the ECB rather than expensively from the market, even though investors might take fright.

€529 billion LTRO2 tapped by record 800 banks 

February 2012

Three-year ECB loans should be for emergencies only. They should not become a replacement for Europe’s bank funding market.

LTRO2: No bank safety in Draghi's massive numbers

January 2012

Bankers predict the next round of ECB financing could top €1 trillion. But it will take more than an LTRO-induced liquidity injection to fix Europe’s banks.

ECB: Two cheers for the three-year LTRO 

January 2012

Will Europe’s leaders do enough to convince banks to finance its problem sovereigns through an ECB-led carry trade?

LTRO: A Talf for Europe

January 2012

ECB lets banks delever in orderly fashion; Bank bond issues might be scarce this year

Global finance: Running on empty 

January 2012

“The LTRO is a lot more positive than we’d originally expected."

“Monumental” uptake of ECB LTRO but carry-trade impact unlikely

December 2011

The €489.2 billion take-up of the ECB’s inaugural three-year LTRO on Wednesday underscores the significance of this new facility to the bank funding market in Europe.

ECB's new LTRO threatens the covered bond market 

December 2011

Banks may opt for cheaper long-term LTRO funding rather than secured issuance next year

Funding freeze pushes banks closer to the edge

November 2011

The ECB announced two new Long-Term Refinancing Operations (LTROs) in October – one for 371 days and one for 406 days. Total borrowing at the October 26 auction was €101.5 billion, with 181 bidders for the 12-month LTRO (far lower than the 1,121 that bid in the June 2009 LTRO).  But for how long can the ECB substitute itself for the interbank lending market?

Banks can't dodge the EU sovereign debt crisis

March 2010

Just when Europe’s big banks have begun to repair their balance sheets and return to profitability, along comes the European sovereign debt debacle. With huge stockpiles of government bonds on their books, can the region’s banks avert a second catastrophe?

ECB offers longer-term finance via six-month LTROsMay 2008 

More on the LTRO

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