The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site.

All material subject to strictly enforced copyright laws. © 2020 Euromoney, a part of the Euromoney Institutional Investor PLC.
Opinion

LTRO: Why the ECB should make every day Christmas

Banks in the eurozone periphery have need, and some justification, for a new targeted LTRO.

Recent discussion on whether the European Central Bank should extend its long-term refinancing operations (LTRO) in 2019 has revolved largely around which banks should be able to use it.

Last time, LTRO targeted banks contributing to the economy. This time, some of its proponents are arguing it should be restricted to banks that have acted on non-performing loans.

This would be a good bone to throw to the inevitable northern European detractors of extending the programme. After all, it is not Christmas every day. Why should the ECB prop up banks that do nothing to help themselves?

In reality, it would be difficult to push banks that have not done enough towards failure. The banking sector is obviously not behind the push by Italy’s Five Star Movement or Greece’s Syriza for greater freedom from austerity measures.

In any case, most banks that use LTRO will be able to find some evidence that they have acted on non-performing loans, even if Italian banks – by far the biggest users of the targeted LTRO (TLTRO) programme – could and perhaps should have done much more to bolster their balance sheets in better times. This is particularly true of the mid-tier lenders.

You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.

SUBSCRIBE ONLINE TODAY

Unlimited access to Euromoney.com and Asiamoney.com

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually

FREE 7 DAY TRIAL

Unlimited access to Euromoney.com and Asiamoney.com, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors

LOGIN NOW

Already a user?

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree