THE EVENT: The European Central Bank is planning to release the
results Wednesday of the next round of its long-term refinancing
operation. The ECB loaned EUR489 billion in December in the first
three-year LTRO at an interest rate of 1% to 523 banks, with the
aim of averting problems at banks that faced maturing debt but
didn't have access to funding through traditional funding markets.
It also was hoped that healthier banks would increase lending to
the real economy with the additional funds.
WHAT THEY SAID: Some analysts said the December LTRO did what it
was supposed to do--to stabilize the European banking system and
increase confidence at a critical time for the sector.
Analysts from Credit Suisse said it is no longer a case of "the
bigger, the better" for the second tranche in February. In fact,
the median consensus estimate for the uptake of the second tranche
as of Friday was lower, at EUR470 billion.
Morgan Stanley said Spanish and Italian banks will be the
biggest users and that much of the proceeds will be "parked" or
invested in government securities.
AUSTRIA
*Erste Group Bank AG (EBS.VI): Company management said that it
has taken EUR3 billion from the December LTRO in order to take
pressure off of 2012 funding needs. After issuing a EUR1 billion
covered bond, the 2012 funding needs of EUR3.5 billion are more
than covered. Thus, management sees no need to participate in the
February LTRO and it seems unlikely that it will do, according to
HSBC research.
*Bank Austria: CEO Willibald Cernko said Feb. 16 that the bank
could take part in the second LTRO, according to Reuters. "If we
think it makes sense to participate, then we will do so," Cernko
said, adding the bank has a "very good" liquidity position.
BELGIUM
*KBC Group NV (KBC.BT): The bank placed EUR3.3 billion in the
ECB system at three-year maturity, of which EUR3.2 billion was for
KBC Bank Ireland, "mostly with underlying Irish collateral," to
make the subsidiary less dependent on funding from within the bank.
"Future use of the LTRO is being considered in order to further
enhance the funding maturity structure," Chief Financial Officer
Luc Popelier said. "In addition, we drew an extra $4 billion on
short-term ECB facilities to hedge our dollar exposure." Chief
Executive Jan Vanhevel added that the bank's use of the facility
would be "prudent."
DENMARK
*Danske Bank A/S (DANSKE.KO): The bank will decide, based on a
commercial evaluation, whether to participate in the next round.
Danske participated in December's round because the ECB offered
"very inexpensive money," Chief Executive Peter Straarup told Dow
Jones Newswires recently. On Monday, the bank declined to comment
on whether it will take part in the second LTRO.
FRANCE
*BNP Paribas SA (BNP.FR): Chief Executive Jean-Laurent Bonnafe
told French radio station BFM Business that a decision would be
taken in the next few days on the next LTRO. He said that either
way, the bank had no plans to use the proceeds of the LTRO to buy
sovereign bonds, in an interview on TV business channel CNBC.
*Societe Generale SA (GLE.FR): Said it was still undecided on
whether to take part in the next LTRO and added that it didn't
think the LTRO was meant to be used to buy sovereign debt.
GERMANY
*Deutsche Bank AG (DB): Chief Executive Josef Ackermann said the
bank didn't participate in the ECB's first LTRO. "The fact that we
have never taken any money from the government has made us, from a
reputation point of view, so attractive with so many clients in the
world that we would be very reluctant to give that up," said
Ackermann, chief executive, explaining to analysts last week why
the German lender didn't borrow from the ECB.
*BayernLB: Officials declined to comment on their intentions for
the next LTRO, but CEO Gerd Haeusler said recently that the bank
didn't participate in the previous one.
*Commerzbank AG (CBK.XE): Didn't participate in the first LTRO,
according to a person familiar with the bank's operations.
GREECE
*National Bank of Greece (NBG): Received EUR6.3 billion in
funding from the LTRO. Management said that there was no net
increase to the bank's ECB funding lines, while it simply shifted
funds from the main refinancing operations to the inaugural
three-year LTRO. Management anticipates making use of extra funding
from the upcoming LTRO on Feb. 29, 2012, without, however, quoting
a figure, according to HSBC research.
ITALY
*Intesa Sanpaolo SpA (ISP.MI): Said it will take part in the
next round. Intesa participated in the last LTRO, taking EUR12
billion, according to Morgan Stanley research, and its executives
have previously spoken of the bank's intentions to take part
again.
*UniCredit SpA (UCG.MI): Italy's largest lender by assets took
EUR12.5 billion under the facility, according to Morgan Stanley
research.
*Banca Monte dei Paschi di Siena (BMPS.MI) took EUR10 billion,
according to Morgan Stanley research.
NETHERLANDS
*ING Groep NV (ING): Still unsure whether to tap cheap funds
from the LTRO, because doing so could hurt its reputation as a
healthy bank, officials said. "We are still debating internally if
we will participate. You have to take in mind that it could harm
our image and reputation," Chief Executive Jan Hommen said at the
fourth-quarter results.
PORTUGAL
*Millenium Banco Comercial Portugues SA (BCP.LB): took EUR5
billion in the first auction and might take a similar amount in the
second auction. But its total exposure to the ECB will not exceed
EUR15 billion, according to HSBC research.
*Banco Espirito Santo SA (BES.LB), Portugal's largest bank by
market capitalization, and Banco Comercial Portugues SA (BCP.LB)
have each borrowed EUR5 billion under the facility. The two banks'
exposure to the ECB, however, remained stable.
SPAIN
*Banco Popular (POP.MC): Popular took EUR8.5 billion in the
December LTRO that is being used to reduce exposure to clearing
houses that finance the ALCO portfolio. The company doesn't intend
to do a carry trade by buying Spanish sovereign bonds, according to
HSBC research.
*Bankinter SA (BKT.MC): Took EUR6.0 billion from the December
LTRO; EUR5.0 billion was new participation and EUR1.0 billion was
rolled over from other existing facilities. For the February
auction, it has EUR5.5 billion of available collateral, but its
participation will be smaller than the December auction. Management
doesn't see the logic behind covering maturities beyond the
two-year horizon, according to HSBC research.
*BBVA (BBVA): Said it had covered all its liquidity needs for
this year by borrowing EUR11 billion from the refinancing
operation. The ECB funding is "liquidity insurance," and doesn't
mean the bank won't issue debt this year if market conditions
improve, BBVA said. It has since issued senior debt in the markets.
BBVA confirmed over the weekend it would seek another EUR11 billion
worth of funds from the second LTRO.
*Banco Santander (STD): Santander's CFO said the bank
participated in the December auction, but didn't detail how
much.
*Bankia SA (BKIA.MC): People familiar with the matter said that
the bank is seeking around EUR15 billion in the second LTRO.
SWEDEN
*Nordea Bank AB (NDA.SK): The bank won't make use of the
upcoming LTRO, a spokesman told Dow Jones Newswires Monday. It also
didn't take part in the first LTRO.
*Swedbank AB (SWED-A.SK): Chief Executive Michael Wolf said
Swedbank won't use the LTRO in February.
*SEB AB (SEB-A.SK): Chief Executive Annika Falkengren said SEB
won't make use of the LTRO. The interest rate on the loans is
favorable, but SEB won't participate as it wants to make clear that
it can manage without the ECB, she said. "We don't want to get to a
point where people think we can't make it on our own," Falkengren
said.
*Svenska Handelsbanken AB (SHB-B.SK): Won't make use of the LTRO
as it doesn't have any need for that source of financing, Chief
Executive Par Boman said.
SWITZERLAND
*Credit Suisse (CS): Said it didn't participate in the first
operation and doesn't plan to participate in the next one.
*UBS AG (UBS): Switzerland's biggest bank, earlier this week
said it didn't participate in the LTRO.
NORWAY
*DNB ASA (DNB.OS): Chief Financial Officer Bjorn Erik Naess told
Dow Jones Newswires previously that DNB will have to evaluate
whether to participate in the next LTRO round. DNB participated in
the previous round in December even though it had good access to
market funding, because the loans were given on quite favorable
terms, he said. Monday, the bank declined to comment on whether it
will take part in the second LTRO.
UK
*Barclays Bank (BCS): Will not take part in the LTRO, according
to people familiar with the matter.
*Standard Chartered Bank (STAN.LN): Will not take part in the
LTRO, according to people familiar with the matter.
*Lloyds Banking Group (LYG): Chief Executive Antonio
Horta-Osorio said last week that tapping the fund "might make
sense." Oriel Securities said Friday that taking part in the LTRO
"makes sense for Lloyds." At a cost of 1% including collateral
haircut, the loan facility should lower Lloyds' funding costs since
Oriel estimates Lloyds was paying 1.4%-1.7% excluding collateral
haircuts on commercial repurchase agreements in 2011.
*Royal Bank of Scotland Group PLC (RBS): Tapped the facility for
EUR5 billion, according to Morgan Stanley research. Chief Financial
Officer Bruce Van Saun said last week that the pricing of the loan
was "attractive" and that there was little stigma attached to
financial institutions that accessed it.
*HSBC Holdings PLC (HBC): Was among those that borrowed even
though it didn't need the money, according to people familiar with
the matter. Any profit the British bank reaps from investing the
borrowed funds will be segregated from HSBC's bonus pool, one
person said. On Friday, HSBC said it will borrow $250 million-$300
million in the next tranche.
IRELAND
*Bank of Ireland PLC (BIR.DB): Tapped the LTRO in December and
will likely do so again at the next opportunity, Chief Executive
Richie Boucher said in a Wall Street Journal report Feb 20.
- By Vladimir Guevarra, Dow Jones Newswires; +44 (0) 2078429486;
vladimir.guevarra@dowjones.com