Sign up to create alerts for Instruments,
Economic Events and content by followed authors
Free Sign Up Already have an account? Sign In
Quotes
All Instrument Types
- All Instrument Types
- Indices
- Equities
- ETFs
- Funds
- Commodities
- Currencies
- Crypto
- Bonds
- Certificates
Please try another search
New Year’s SALE: Up to 40% OFF InvestingPro+ CLAIM OFFER
MarketPulse Europe: Banks Lead Rebound on Hopes for New ECB Support
© Reuters.
Investing.com -- Banks are leading the rebound in European stocks Monday, on rising hopes that the European Central Bank will take action to support the flagging euro-zone economy.
Expectations are rising that the ECB will revive one of its crisis-era tools – so-called Targeted Long-Term Refinancing Operations, or TLTROs – to allow banks to lock in ultra-low funding costs that will help keep the business of lending – just about – profitable in an environment of near-zero interest rates. The ECB has over 700 billion euros in such four-year loans outstanding right now, but hasn't issued a new one in nearly two years.
At 04:45 AM ET (0945 GMT), the Euro STOXX Banks index was up 1.6%, while the benchmark Euro Stoxx 50 was up 1.1% at 3,168.45.
European Central Bank board member Luis de Guindos said Monday that the ECB hadn’t yet discussed when or how it would conduct any new operations, but did say in a speech that a “high degree of continuing monetary support is essential,” which strongly suggests that the central bank won’t let the existing TLTROs expire without some kind of replacement. The biggest outstanding TLTRO, at 379 billion euros, is due to expire in June 2020. Bloomberg reported de Guindos as saying that the TLTRO program would be analysed “in the coming months.”
As it was Spanish and Italian banks that made the most use of TLTRO funds during the crisis, they’re also the ones most vulnerable to losing the benefits of them. Spanish and Italian banks were performing best this morning, with Unicredit (MI:CRDI), Intesa Sanpaolo SpA (MI:ISP) and BBVA (MC:BBVA) all among the top performers.
Northern European banks, which don’t need the ECB’s safety net as much, were also higher. In the past, they’ve tended to suffer more from the side-effect of TLTROs – a glut of liquidity that caps lending margins and profits. But Germany’s Commerzbank (DE:CBKG) and Deutsche Bank (DE:DBKGn) were both up, as was BNP Paribas (PA:BNPP), possibly a reflection of chatter that the ECB will devote more attention to ensuring that a fresh round of long-term support doesn't also create a long-term flatlining of euro interest rates.
Related Articles
Add Chart to Comment
Confirm Block
Are you sure you want to block %USER_NAME%?
By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.
%USER_NAME% was successfully added to your Block List
Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.
Report this comment
I feel that this comment is:
Comment flagged
Thank You!
Your report has been sent to our moderators for review
Add a Comment
We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:
Enrich the conversation, don’t trash it.
Stay focused and on track. Only post material that’s relevant to the topic being discussed.
Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.
Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.