Intesa Sanpaolo, Unicredit, Ubi, Bpm, Bper. Here’s what the Italian banks have taken with the ECB’s Tltro-3

Intesa Sanpaolo, Unicredit, Ubi, Bpm, Bper. Here's what the Italian banks have taken with the ECB's Tltro-3

Numbers and estimates on the fourth ECB Tltro-3 refinancing auction for Intesa Sanpaolo, Unicredit, Ubi Banca, Banco Bpm and Bper

1,308 billion euros. It is the total amount that the European Central Bank awarded yesterday to 742 Eurozone credit institutions through the fourth Tltro-3 refinancing auction, the transaction of this kind with the greatest scope in the history of the European Central Institute with headquarters in Frankfurt.


Tltro-III is essentially the new three-year maxi loan to banks with rates that can reach -1%.


"The level reached yesterday is worth more than double compared to the previous" record "for long term operations (Ltro), which dated back to March 2012 with 530 billion – commented Il Sole 24 Ore – A consequence of the fact that this time the conditions were really convenient for the banks, just to push them to turn then that money to support the real economy, in the form of loans to families and businesses, to counter the effects of Covid-19 ".


The super-facilitated conditions of the TLTRO operations, which the ECB made even more advantageous in April are narrowing the spreads, wrote Repubblica : “And Italy, which in its Bulletin the ECB indicates among the most affected economies of the euro area together with Spain and France, will be among the countries that will probably benefit the most, given that it offers the most attractive returns in the area, even of the Greek 10-year (+ 1.32% yesterday), while the Spanish 10-year bonds return 0, 52% and the Portuguese ones 0.51%. And those of Austria, Belgium, Finland, France, Holland and Germany have negative rates (the Bund has fallen to -0.44%) ".


The mechanism is technically called "carry trade": you borrow money at negative rates (from the ECB) and invest in higher yielding assets, to increase your profit by buying BTPs, which thanks to the ECB shield are less risky than reports the real economy, Republic recalled.


Basically the banks with the carry trade use the money borrowed by the ECB to earn on the differential given by the much higher yields that arise when buying government bonds: an aid estimated by analysts at around 15 billion on their profits, the Sun estimated 24 hours .


Emergency measures that add up to the € 1,350 billion of the securities purchase program for the pandemic emergency, the Pepp, negative rates and the relaxation of supervisory rules: just yesterday the European Banking Authority (EBA) extended to 30 September the most flexible approach on loan moratoriums.


“A 'full swing' – that of the ECB – to public debt to respond to the crisis with a budget stimulus, through the Pepp with which the ECB has dribbled the obstacles posed by the German constitutional judges. And all the way forward to bank loans, for an economy that ten years after the previous crisis receives a record beating. The central estimate for the Eurozone GDP – reaffirmed yesterday in the Frankfurt Economic Bulletin – is -8.7% in 2020 – wrote Ansa – The scenario that Frankfurt fear, in fact, is that induced asphyxia at the lockdown it destroys the production base: that is, it cleansed businesses, especially SMEs, in fact by cutting off potential growth for years.


What are the numbers scored by Italian banks such as Intesa Sanpaolo, Unicredit, Bper, Banco Bpm and not only with Tltro-III? According to a survey of the Sole 24 Ore among the main Italian credit institutions, the lion's share belongs to UniCredit (with 94.3 billion total required, allocated for 51.3 billion to the Italian Spa, for 25.7 billion to the German UniCredit Bank Ag, for 15.4 billion to the Austrian UniCredit Bank Austria and for another 1.9 billion to the other European banks of the group) and Intesa Sanpaolo (35.8 billion, which will bring the total of the Tltro 3 in which the group has participated to 70.9 billion). But Banco Bpm (22 billion), Bper (14 billion) and Ubi (12 billion) also played an important role, all coming close to reaching the maximum amount that can be requested, which for Italy as a whole reaches 468 billion , wrote the newspaper directed by Fabio Tamburini today.

This is a machine translation from Italian language of a post published on Start Magazine at the URL on Fri, 19 Jun 2020 13:50:16 +0000.