Spanish banks borrow 337 bn euros from ECB

European Central Bank loans to Spain's battered banks shot up 17.2 percent to a record 337.2 billion euros ($411 billion) in June, the Bank of Spain said Friday.

Spanish banks' debts to the eurozone's banker have racked up record highs each month of this year as the banks struggle to raise money on wary interbank and debt markets.

Borrowings from the ECB, which were up from the previous month's record of 287.8 billion euros, have risen remarkably from a low point in April 2011 of 42.2 billion euros.

In two landmark but highly disputed operations in December and February, the ECB offered 1.1 trillion euros at ultra-low rates to banks.

The ECB's aim was to avert a looming credit crunch, hoping banks would lend the cheap funds to businesses and households and keep credit flowing in the debt-wracked eurozone economy.

However, ECB data suggested the banks were instead taking the money from the ECB and giving it straight back to the ultra-safe institution, fearful of lending it to riskier borrowers like other banks.

Spanish banks tapped the cheap ECB loans heavily as they sought in vain to borrow from other eurozone lenders.

Few investors are prepared to lend to Spanish banks, now paying the price of heavily over-extending themselves during a property bubble that imploded in 2008.

Spain's eurozone partners have agreed to extend a rescue loan of up to 100 billion euros to salvage the financial sector, with conditions that will include reckoning with the plunging value of banks' property assets.

On the debt market, investors demanded yields of more than 6.7 percent for Spanish 10-year government bonds in late morning trade, a level Madrid has admitted is unsustainable over the long term.

Last month, the ECB said it would widen the range of securities it accepts from eurozone banks in exchange for its loans in a move to boost lending to firms and households.

In a move that helped Spanish banks in particular, the ECB said June 22 that it would accept residential mortgage-backed securities as collateral for loans.

Editor’s note:Yahoo Philippines encourages responsible comments that add dimension to the discussion. No bashing or hate speech, please. You can express your opinion without slamming others or making derogatory remarks.

  • Island Hopping in Honda Bay Gael Hilotin - Pinay Solo Backpacker
    Island Hopping in Honda Bay

    Puerto Princesa has long been a magnet of sun-worshippers and pleasure seekers. Gratefully, despite the crowd it brings, it has managed to preserve its splendor over the years. Resting on the eastern coast of the green city is Honday Bay, … Continue reading → …

  • Rising number of trafficked fishermen alarms Tawi-Tawi authorities VERA Files - The Inbox
    Rising number of trafficked fishermen alarms Tawi-Tawi authorities

    By Jake Soriano, VERA Files Bongao, Tawi-Tawi—Tawi-Tawi authorities are alarmed at the growing number of fishermen from the Visayas who end up here after being recruited by human trafficking syndicates to engage in dangerous compressor diving. The latest case involves … Continue reading → …

  • The return of Gigi Reyes Ellen Tordesillas, Contributor - The Inbox
    The return of Gigi Reyes

    By Ellen T.Tordesillas This is going to be fascinating. Atty. Gigi Reyes, former chief of staff of Sen. Juan Ponce-Enrile who is included among those accused of plunder in connection with the misuse of Priority Development Assistance Fund, came back … Continue reading → …

Poll Choice Options