07 December 2018

フィナンシャル・タイムズ紙：UBSアナリスト、ECB（欧州中央銀行）のTLTRO（条件付き長期流動性供給オペレーション）の延期はないと予想

It is of particular interest because Italian banks have received a third of the total, and Spanish banks have taken up almost a quarter.

Here is UBS on the political complications around an extension:

Given that the TLTRO-II is used extensively by Italian banks, it would arguably be important for the ECB to avoid the impression that it is selectively helping an individual country, or that it is deploying monetary policy tools to help individual banks meet their regulatory requirements. Instead, the ECB would have to make the case that any TLTRO extension was necessary from a pan-Eurozone point of view (even if Italian banks were to benefit more than others).

Being obscure, the TLTRO program has been subject to less scrutiny than the ECB's quantiative easing program on the question of distribution across member states.

UBS concludes that an extension is unlikely because of strong loan growth and a fall in the proportion of bad assets on bank balance sheets, both across the Eurozone generally. They also suggest new business is "lower risk" than previous lending.

So what would replace the funding? [FT emphasis]

Since theTLTRO-II facility was launched, Eurozone deposits have grown by €424bn more than loans, sufficient to refinance 60% of TLTRO borrowings. On current trends, excess deposit growth, including in Italy and Spain, should prove sufficient to refinance ECB borrowings unless wholesale markets are closed or prohibitively expensive, demanding recourse to a larger deposit base.

On the one hand, market access is important because of the need for banks to maintain their capital ratios, which partially depend on the sales of subordinated (and by definition riskier) debt. On the other hand, market access is an important part of the funding mix for the banking sector.

This is where TLTRO II comes in. If banks cannot access markets, this increases the need for a continution of the program, but it would also highlight a widening consensus around the depth of balance sheet problems. The ECB would be targeting its lending towards banks which, according to markets, had the greatest problems.

Those problems might persist in specific regions even if, overall, the outlook for Europe is positive. If it were withdrawn, lending would contract more sharply in these already-sensitive areas. At that point, the cross-border political constraints start to enter the discussion. The more positive the overall outlook, the harder it would be to make a case for pan-European stimulus.

Decisions about the future of the TLTRO program will probably be made in the spring of 2019. It might not remain obscure forever.

Full article on Financial Times (subscription required)

© Financial Times