10 March 2016

ECB announces new series of targeted longer-term refinancing operations (TLTRO II)

The Governing Council of the ECB decided to launch a new series of four TLTRO II. The new operations will offer attractive long-term funding conditions to banks to further ease private sector credit conditions and to stimulate credit creation.

Targeted longer-term refinancing operations (TLTRO II) is intended to reinforce the European Central Bank’s (ECB) accommodative monetary policy stance and to strengthen the transmission of monetary policy by further incentivising bank lending to the real economy. In conjunction with the other non-standard measures in place, TLTRO II will contribute to a return of inflation rates to levels below, but close to, 2% over the medium term.

Counterparties will be able to borrow in the operations a total amount of up to 30% of a specific eligible part of their loans as at 31 January 2016, less any amount which was previously borrowed and is still outstanding under the first two TLTRO operations conducted in 2014.

The four TLTRO II operations will be conducted in June, September and December 2016 and in March 2017.

All TLTRO II operations will have a maturity of four years from their settlement date. Counterparties will be able to repay the amounts borrowed under TLTRO II at a quarterly frequency starting two years from the settlement of each operation. Counterparties will not be subject to mandatory early repayments.

The interest rate applied to TLTRO II will be fixed for each operation at the rate applied in the main refinancing operations (MROs) prevailing at the time of allotment.

The dedicated reporting scheme of the first series of TLTROs will be retained for TLTRO II, with only two report submissions required, i.e. one to document the borrowing allowance and the benchmark, and one to check the lending performance against the benchmark in two years’ time.

In addition, the Governing Council decided to introduce an additional voluntary repayment possibility for all currently outstanding TLTROs in June 2016, coinciding with the settlement of the first TLTRO II operation. This will allow counterparties to roll over amounts borrowed under the current TLTROs into TLTRO II. The remaining two operations of the current TLTRO programme will be implemented in March 2016 and June 2016, as originally scheduled.

Further technical details of the TLTRO II operations will be announced in due course.

Press release

Open market operations

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