ECB's June TLTRO indicates banks borrowing meets expectation

At the ECB's June TLTRO, 128 banks borrowed about €73.8bn of liquidity. Such result is broadly in line with the expectations of €80bn (consensus, €60-80bn). As a reference, at the previous three TLTROs, the ECB allotted a total of €310bn - €83bn in September 2014, €130bn in December 2014 and €98bn in March 2015.

The borrowing was quite concentrated, with an average take-up of €0.6bn, slightly lower than €0.7bn in March, but higher than in the two operations last year (€0.3bn and €0.4bn, respectively), notes Barclays. This would suggest a larger participation by big banks, which have the greatest potential to support lending to the real economy.

The decent participation in the June TLTRO, which has brought the total take-up at the two TLTROs held so far in 2015 to €172bn, confirms the view that the TLTRO remains an attractive funding instrument for banks, even in the context of QE (since the launch of the PSPP on 9 March, banks have sold a tiny fraction of their government bonds into the QE buying), says Barclays.