Arab Today, arab today ecb makes it easier for banks to borrow cash
Last Updated : GMT 21:25:08
Arab Today, arab today
Arab Today, arab today

ECB makes it easier for banks to borrow cash

Arab Today, arab today

Arab Today, arab today ECB makes it easier for banks to borrow cash

Frankfurt - AFP

The European Central Bank said Friday it will widen the range of securities it accepts from eurozone banks in exchange for its loans in a move to boost lending to firms and households. The ECB said in a statement that its policy-setting governing council decided at a meeting on Wednesday \"on additional measures to improve the access of the banking sector to (its) operations in order to further support the provision of credit to households and non-financial corporations.\" The measures included a reduction in the rating threshold and an amendment of the eligibility requirements for certain asset-backed securities (ABSs), the statement said. In a move that will particularly help Spanish banks, saddled with huge amounts of mortgage loans dating back to a property bubble that burst in 2008, the ECB said it would now accept residential mortgage-backed securities as collateral for loans. Similarly, auto loan, leasing and consumer finance ABSs would also be included in the pool of eligible collateral, the central bank said. The changes would come into effect after June 28, it added. The move comes as Spain is drawing up measures to recapitalise its banks. On Thursday, Spain announced that its crisis-torn banks needed up to 62 billion euros ($78 billion) to survive a severe financial slump -- considerably less than the maximum 100 billion euros originally foreseen in a June 9 eurozone rescue offer. Spanish Finance Minister Luis De Guindos announced Friday that a formal request for eurozone aid would be submitted on Monday. The ECB last widened in December the range of assets it accepts as collateral, in effect granting weaker commercial banks greater access to long-term loans at ultra low interest rates of 1.0 percent at present. If eurozone banks do not have eligible collateral for ECB loans and cannot raise funds on interbank markets, they must apply for more costly loans from their national central banks under an Emergency Liquidity Assistance scheme.

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