The push to repay loans from the ECB's long-term refinancing operation has generated concerns that banks are moving prematurely and could be vulnerable if the eurozone crisis intensifies again.
The ECB activated the emergency loan programme... late last year, doling out two batches of inexpensive loans that are good for three years. Banks are permitted to repay them starting next month.
At least one lender, Germany's Commerzbank AG has said publicly it intends to repay in January most of what it borrowed from the ECB. Executives at other banks, including France's big three lenders, also currently expect to repay at least portions of the loans next month, according to people familiar with the banks' plans.
The early repayment of the loans reflects the fact that some banks are better able to stand on their own than they were a year ago, when the eurozone's intensifying financial crisis left many banks unable to borrow on the capital markets.
While the primary goal of the ECB loans was to prevent banks from capsizing due to a lack of funds, a secondary aim was to coax banks to use the cash infusions to lend to customers and other banks. That hasn't happened as much as policy-makers would have liked, although banks in some countries have purchased billions of euros worth of their governments' bonds. Instead, Europe's biggest banks have largely recycled the borrowed money back to central banks, which generally pay less in interest than what the banks paid to borrow the funds. Meanwhile, lending to individuals and businesses in the eurozone has remained scarce.
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