Euro-area banks set to know ECB loan details by June

Bloomberg

Euro-area banks will know by June how generous the terms of the European Central Bank’s new loans are going to be, according to Governing Council member Olli Rehn.
Policy makers have yet to pass judgment on the severity of the current slowdown that prompted that measure, the Finnish central bank governor told Bloomberg in an interview. They are determined to keep lending conditions favorable with record-low interest rates and the new round of long-term funding announced earlier this month.
“We will take the decisions in due time, well in advance of the start of the operations, so that the general public and the banks are early enough aware of their precise nature,” he said, when asked about details of the ECB’s so-called TLTRO-3 program. “We have the next meetings in April and June.”
Banks in the euro area have slowed lending in recent months as companies reined in investments amid uncertain business prosp-ects. The ECB announced on March 7 that it will offer fresh liquidity to banks starting in September to spur credit growth, arguing this will improve the economy’s resilience to a weakening global environment.
Rehn said the terms of the new operations “should be close” to TLTRO-2, which provided the industry with more that 700 billion euros ($792 billion) in loans between 2016 and 2017.
To banks, low profitability poses another key challenge, and some say that nearly five years of keeping the ECB deposit rate negative haven’t helped. It requires financial institutions to pay interest on excess liquidity held at central bank.