Eurozone: Doors Open for a TLTRO III Next Year - SocGen
Anatoli Annenkov, Research Analyst at Societe Generale, suggests that of
the latest measures taken by the ECB, the new TLTRO II is the most
innovative, with the ECB offering to lend at a negative interest rate.
Key Quotes
“While
aiming to boost lending, we expect the main impact to be to reassure
markets over bank funding, with the relatively low bar for applying the
lowest interest rate and the removal of sanctions implying that this
liquidity offer will be less “targeted”.
Draghi claimed a
“pretty successful” experience with the first TLTRO. We disagree and
also doubt the new TLTRO II will do much to boost private sector lending
in the current context of weak demand and structural rigidities. The
take-up could still be high for the purpose of funding certainty.
In
light of banks’ funding options and the credit needs of the real
economy, we expect around 90% (€380bn) of the old TLTRO to be rolled
over and a net take-up of around €150bn this year, mainly by peripheral
banks.
Looking further ahead, we keep the door open for a TLTRO
III next year which in terms of corporate credit expansion could be more
successful as the investment outlook improves, possibly then also
including mortgage loans.”
(Market News Provided by FXstreet)
