“World”: ECB may have lent too much money to Spanish banks
Berlin – As the “Welt am Sonntag” reported, the European Central Bank (ECB) may have made a grave mistake in its collateral policy. The Spanish banks could have received too much money from the ECB.
According to the newspaper, the ECB has lent more than € 16.6 billion to Spanish banks through its refinancing business, which are not covered by the requirements of the central bank. At the request of the newspaper, the ECB initially replied that this was not a mistake. At the same time, a spokesman told the paper that the facts would be examined.
The “world” argues about the rating agencies of Spain. These ratings are crucial to the amount of central bank money that banks receive against collateral from the ECB: the worse the sovereign ratings are, the higher the discount that the central bank makes on government bonds. In the case of Spanish banks, the ECB has accepted short-term debt instruments, so-called T-bills, against excessively low risk premiums, the paper writes.
The three major rating agencies Standard & Poor’s, Moody’s and Fitch currently rate Spanish government bonds only in the “B” range, ie with a second-rate rating. The fourth agency used by the ECB, the Canadians of DBRS, awarded “A low” a first-class rating – but only for long-term government securities. For the valuation of short-term debt, DBRS’s verdict is actually ruled out. However, according to Welt, the ECB refers to a non-public rule. It stipulates a derogation whereby long-term ratings can also be accepted for short-term government securities.
However, this does not seem to fit the central bank’s approach to another euro-problem child: Irish government bonds, which are also rated “low” by DBRS, classify the ECB as second-rate in its refinancing business. As a result, banks submitting Irish government securities to the ECB must accept higher discounts than financial institutions depositing Spanish securities. The total volume of Spanish T-bills currently stored at the ECB as collateral estimates the “world” at 80 billion euros.
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