UniCredit Chairman Dieter Rampl.|EPA/DANIEL DAL ZENNARO
A non-governmental study on performances of the Italian banking sector last week revealed that UniCredit topped the list of the banks those used the European Central Bank’s (ECB’s) three year funding mechanism.
The study by Morgan Stanley(MS), cited by many local reports, estimated UniCredit used up €12.5 billion from the three year ECB fund. Intesa Sanpaolo with €12bn and Monte dei Paschi di Siena with €10bn, came close behind. The study analysed the effectiveness of the three year mechanism in thwarting the fiscal challenges faced by the European banks and the EU economy as a whole. It cited the lack of inbound investments as the prime cause of concern which, according to MS experts, are now principally diverted to trusted bond issuers. The sleuth named the shortage of commercial funds as the prime reason behind the deficit of market liquidity. After Mario Draghi took over as president of the ECB in November, he instituted the funding mechanism to counter the crisis.
If the data is correct, it means the big Italian banks have already eaten up 90% of their total funding needs for 2012 from the ECB, devouring more than €50bn in aggregate.
Meanwhile, Emergency deposits with the ECB have fallen from a peak of more than €450bn early in the new year to €395bn now. Aside from Italian banks, other significant users of the ECB’s three-year facility included Royal Bank of Scotland, which tapped it for €5bn via its Dutch subsidiary and Spanish banks, the study found. After an initial hoarding of cash, the total of €489bn raised by more than 500 banks in the December auction has been put to work. Analysts believe a two-tier banking system may now be emerging, comprising groups that have access to normal commercial bond funding and those that are reliant on artificial systemic support. According to an ECB report on Thursday, funding considerations had played “a major role” when banks bid last month for the three-year loans.
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