Spain’s lenders borrowed 192.97 billion euros ($209 billion) from the ECB in the last month of 2022, down from 273.7 billion euros in November, Bank of Spain data showed on A week.
It was the lowest amount lent by Spanish lenders since June 2020, when they borrowed around 196 billion euros, according to the Spanish central bank.
Eurozone banks started repaying early those multi-year loans from the ECB as inflation was rising and the central bank raised borrowing costs on these loans in November, hoping that the banks would prefer to return the funds rather than pay higher interest.
On Friday, the ECB said that eurozone banks had to pay back another 62.7 billion euros early, bringing the total reduction of outstanding loans to almost 860 billion euros in just a few months.
Banks have until recently been sitting on 2.1 trillion euros of cash from the ECB’s TLTROs, launched to encourage lending and spur economic activity when the eurozone was threatened with deflation.
Citi recently estimated that Italian and Spanish banks were benefiting the most from the cash pumped into the financial system.
In August 2012, Spanish banks received a record 411 billion euro bailout from the ECB, when the country’s financial turmoil peaked and weak lenders were given an aid package of ‘ 41.3 billion euros from the European Union that summer.
(Reporting by Jesús Aguado; additional reporting by Balazs Koranyi; Editing by David Goodman and Tomasz Janowski)
