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Marginal Lending Facility Borrowings Plunge - Is The European Liquidity Situation Back To Normal?

Tyler Durden's picture





 

After having surged for 6 days starting with a major jump on February 16, from €1.2 billion to €15.8 billion, borrowings under the ECB's 1.75% Marginal Borrowing Facility plunged overnight from €14.9 billion to €2.2 billion. As was reported previously, the supposedly responsible banks for this surge in borrowings were Ireland's two most insolvent financial entities: "The FT reports that "Anglo Irish Bank and the Irish Nationwide
Building Society, Ireland’s two most troubled lenders, were behind a
spike in overnight borrowings this week from the European Central Bank,
according to people familiar with the transactions." A senior figure familiar with the transaction said it was “to facilitate” the sale of deposits by Anglo Irish and Irish Nationwide under the restructuring plan. Under the ECB’s normal refinancing operations, the collateral is locked up for a week. Tapping the ECB’s overnight or “marginal lending” facility, although more expensive “gives the banks the freedom to have the assets at their disposal immediately if there is a quick sale" he said." So does this mean that AIB and the INBS have completed their asset sales and the collateral has been unwound from overnight activity? That would be the logical explanation, especially as today is an important day for Ireland with Enda Kenny expected to become Taoiseach imminently. What will be curious is if the MLP borrowings surge once again in the coming days: at that point the "Irish" excuse will no longer be applicable.

 


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Fri, 02/25/2011 - 10:50 | Link to Comment sudzee
sudzee's picture

The Irish will be pulling an "Iceland" next. As Paddy once said, fuk them bwankers.

Fri, 02/25/2011 - 10:52 | Link to Comment pendragon
pendragon's picture

the surge correlates with the deposit base that was sold so there is literally nothing to see here

Fri, 02/25/2011 - 10:51 | Link to Comment Dick Darlington
Fri, 02/25/2011 - 10:51 | Link to Comment Doubleguns
Doubleguns's picture

The bank vaults are full, they need a run on the banks to make room for the next borrowing.

Fri, 02/25/2011 - 10:54 | Link to Comment Doubleguns
Doubleguns's picture

The bank vaults are full, they need a run on the banks to make room for the next borrowing.

Fri, 02/25/2011 - 10:54 | Link to Comment RobotTrader
RobotTrader's picture

Check out the Ransquawk headline:


02-25 09:48:


ECB's Nowotny says recovery is now self-sustaining, financial crisis has been overcome and focus is now on public finances
Investors
cheered this news and immediately started buying bank stocks,
especially after Goldman upgraded WFC at the absolute worst possible
time for the bears.
I think by March 31, the Fed and the ECB will be sending out these blurbs on Twitter and Facebook. Hey, whatever it takes to get the Wildebeest Herd moving in the required direction. Rumors or false stories, or not.... LOL...

Fri, 02/25/2011 - 11:02 | Link to Comment wandstrasse
wandstrasse's picture

Nowotny is right, everything IS fine over here! The sun is shining, cars are driving around, a bit cold, but hey, it's February, not July!

Fri, 02/25/2011 - 10:55 | Link to Comment pendragon
pendragon's picture

the scary thing about the situation in ireland is the voters are going to elect a party with a different name but with basically identical policies to the previous shambolic govt. a couple of years down the road and gerry adams is going to look pretty electable there....

Fri, 02/25/2011 - 13:40 | Link to Comment LawsofPhysics
LawsofPhysics's picture

now where have I heard of voters doing such things...  ...sounds so familiar...

hhmmm.

Fri, 02/25/2011 - 11:02 | Link to Comment THE DORK OF CORK
THE DORK OF CORK's picture

There is a very concise and informative article over in Euro intelligence.

Entitled "a critique of the ECBs liquidity problems"

It is a more creditable explanation of my admittingly blunt pronouncements that the ECB considers bank debt superior to sov debt.

In many ways America is not a completly banked nation - however in Europe democracies have to bow to the wishes of these high priests no matter how they perform their functions.

They have created a credit hyperinflation in Europe this past decade yet the taxpayer is expected to pay for their deviance - the ECB is truly a Den of vipers with zero oversight from the people or their representatives.

Fri, 02/25/2011 - 11:07 | Link to Comment eurusdog
eurusdog's picture

I find it interesting that since the 16th the EURUSD has gained over 250 ppoints and as soon as the borrowing ends, the EURUSD starts what looks like a pretty controlled decline, not like the 150 point fall and retracement on the 22nd.

Fri, 02/25/2011 - 11:10 | Link to Comment Sweedumz
Sweedumz's picture

"Anglo Irish Bank and the Irish Nationwide Building Society, Ireland’s two most troubled lenders, were behind a spike in overnight borrowings this week from the European Central Bank, according to people familiar with the transactions." A senior figure familiar with the transaction said it was “to facilitate” the sale of deposits by Anglo Irish and Irish Nationwide under the restructuring plan.

Specifically, Anglo Irish borrowed €3.5 billion to lend to AIB, so that AIB could use that to buy the deposits off Anglo Irish for €3.5 billion. Story is via:

http://blog.cornerturned.com/2011/02/25/aibs-e3-5bn/

This is what "back to normal" for bank liquidity looks like:

http://blog.cornerturned.com/wp-content/uploads/blog.cornerturned.com/20...

Fri, 02/25/2011 - 11:25 | Link to Comment THE DORK OF CORK
THE DORK OF CORK's picture

The ECB has been creating a giant ogre of private debt on the backs of a tiny thumb sov debt market.

If you beleive the sov debt represents the underlying wealth generating capacity of the state then what is private debt but a sucking burden on productivity.

These bankers are a pox on humanity - we have given them governance over our lives little realising that they are but little men capable of nothing but debt creation.

With 20 years of unchallenged governance they have created a malinvestment nightmare on a comparable financial scale to the Two World Wars !!

Fri, 02/25/2011 - 11:29 | Link to Comment SDRII
SDRII's picture

then there is the coming icelandic referendum on repayment

Fri, 02/25/2011 - 11:31 | Link to Comment Rogerwilco
Rogerwilco's picture

Cue the "ode to joy" and sing it loudly:

Citizens, Europe shall flourish
A great task calls on you
Golden stars in the sky are
The symbols that shall unite us.

Now about that great task...

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