Rabobank analysts point out that recently, the ECB had announced TLTRO-III to preserve favourable bank lending conditions, even when Rabobank were expecting limited uptake, and net new TLTRO-borrowing could even be negative.
Key Quotes
“Italian and Spanish banks can only borrow EUR 65bn on top of current TLTRO-II use, and due to deleveraging they may not even need to roll over all of their TLTRO-II borrowing.”
“For core banks, the variable rate and 2 year maturity aren’t a very attractive proposition.”
“The big unknown is the built-in incentive scheme that should preserve credit conditions, although we doubt that any design will substantially increase net use of TLTRO-III.”
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