Repayment Deadline for ECB Loans Looms for Banks

On June 28, European banks will have to take out their checkbooks. On this date will arrive one of the largest deadlines – nearly 500 billion euros – for the reimbursement of TLTROs. This acronym, which stands for Targeted Long Term Refinancing Operation, designates the long-term loans (3 years) offered by the European Central Bank to banking institutions to encourage them to finance the real economy. These will gradually expire by December 2024.

“The ECB had already carried out long-term financing for banks during the financial crisis of 2008 or that of the euro zone, recalls Eric Dor, director of economic studies at IESEG. But TLTROs are specific in that the cost of borrowing depended on the provision of loans to businesses and households. If they fulfilled their objectives, they were even able, at one time, to benefit from a negative rate of 1%. »