The European Central Bank, in concert with national regulators, has asked recipients of the bank's three-year liquidity facility, the long-term refinancing operation, how they intend to fund themselves without the bank's support.
Senior bankers have said that the request was not formal but, coming only a week after a second round of lending under the facility, they said it was a surprise it had happened so quickly. A senior debt capital markets banker, concerned that accepting the ECB money could later be used by regulators as a way of intervening in areas such as compensation and dividends, said he had expected such a move from regulators following the LTRO. “This is the sting in the tail I’ve been worried about”, he said. “Who knows what else is coming down the line in terms of strings attached to the facility?”
"The Bank of England wasn’t so quick to ask beneficiaries of the special liquidity scheme [under which banks could exchange mortgage-backed securities and other instruments for three-year Treasury bills] for their plans."
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