Chillin' out till it needs to be funded
And before you listen to the joint declaration from Greece and EC President Barroso later in the morning, the banks bought in a large amount for buying and selling Italian and Spanish bonds/yields and generally keep the EC Fixed Income market a happy shopping place without any commitment to extend credit.
As is happening in other highly leveraged markets on the cusp of a breakdown since 2009, like Munis and Structured Finance, a high amounts of redemptions of debt this year from European Banks will not be replaced by new Liabilities on the balance sheet as they target a healthy CAR.
Of course their hope from smaller regional banks to start extending more credit but then we have all dealt with Hope before. The ECB Balance sheet probably goes up to EUR 3.47 tln after the LTRO window is totted up while most of it on the assets side will go thru the ECB deposits again but instead of one cycle of buyer and seller banks of loans, Mario Draghi would be expecting the money to get shopped around between more trades before coming back to ECB safety.
800 banks accessed the second round of going around the LTRO window. According to a Credit Suisse report earlier , banks are due t process EUR 550 bln in debt redemptions on their balance sheets this year for which they need to be not just liquid but able to return the funds without losing any remaining income on the balance sheet.