Gross LTRO Liquidity Injection - €489 Billion; Net: - €210 Billion

Tyler Durden's picture

SocGen explains why the €490 billion LTRO number is misleading and why, net of rolls, the actual new liquidity is about 60% lower. In other news, don't forget to add €210 billion in net "assets" to the ECB's already record balance sheet of €2.494 trillion, bringing it to a fresh new record of €2.7 trillion, or $3.5 trillion. At what point will the market start asking questions of the world's most insolvent Frankfurt-based hedge fund (which has repeatedly said it refuses to print cash to cover capital shortfalls) we wonder.

From SocGen's Klaus Baader

Banks pile into ECB’s new super-long-term liquidity facility


The first-ever 3-year liquidity operation by the ECB was an unqualified success. Banks bid for a greater-than-expected €489.2bn, making this the largest-ever single refinancing operation in the ECB’s history.


However, this is not the net amount by which outstanding ECB open market operations have increased. Because banks reduced their use of the Main Refinancing Operation (MRO) by €123bn yesterday, and also the use of 3-month long-term refinancing operations (LTROs) by €111bn allotted today, the net increase is smaller.


Moreover, several banks made use of the possibility to swap out of the recent 12m LTRO that was allotted in October into the new 32-month facility (123 out of 181), to the tune of €46bn.


So the net increase in outstanding open market operations is about €210bn, which is a considerable amount compared with the €514bn in total MOs that were outstanding at the beginning of the week. But arguably more important than the raw amount by which liquidity has increased is that the maturity of those funds has lengthened drastically, which will give banks more planning certainty and will hopefully support lending to households and enterprises as well as creating additional demand for bonds issued by the hard-pressed southern European member states.


Another sign of the success of the auction was the large number of banks that participated. 523 banks entered bids, which compares with 130-200 at the weekly MROs, and 181 at the most recent 12-month LTRO. So, clearly there is no sign of stigma here. Another 32-month LTRO is planned for 29 February.

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flyr1710's picture

oh the irony of Soc Gen explaining this

jcaz's picture

Exactly-  it's so misleading that even Soc Gen feels a need to clarify- priceless!

knight99's picture

people will be begging for the next crisis to be like the one of 08. The great reset is coming

AngryGerman's picture

we are still in for a little bit more of muddling through

Manthong's picture

There may be a bit too much clarity out there now to allow for the s.o.s. market.

They slung another .25 Trillion euro into the mix and it is obviously not enough.

Day of reckoning?


Irish66's picture

523 banks is scary

Everybodys All American's picture

Somebody is printing. Who?

Everybodys All American's picture

It better not be our Fed printing is all I can say. Because their will be more than a political price to pay.

GeneMarchbanks's picture

Nah. Fed printing is coming shortly, the only question is whether it'll include Euro debt or just MBSs. That's the way the cookie crumbles...

Ghordius's picture

It's the ECB - not directly, but the effect is the same "as if".

Tried to explain it here 2000582.

It does not look like QE to the German, Dutch and Finnish Electorates, it's relief for those govs that have a good hold on their banking systems, and it's more "political" than a simple QE.

Call it PolitQE.

Vampyroteuthis infernalis's picture

Rehypothecation II. The truth hurts.

AngryGerman's picture

Now something really important:

Jennifer Lopez mistaken for her toy boy's mother

According to the Enquirer, Jennifer recently spat back at a McDonald's employee after she and Casper (a backup dancer) visited the fast-food restaurant, and one of the cashiers asked Casper if he wanted to pay separately to his mum.


Fuck this, I'll do her. I'll sit on her lap and suck on her titties like a baby, I wouldn't mind.

agent default's picture

And pretty much everything is crashing right now.  Ok, who collapsed this time?

AngryGerman's picture

it's the amy whinehouse effect: an alcoholic can die when drinking again after some days on the wagon.

WonderDawg's picture

Maybe the implications of Oracle's earnings are being weighed more heavily than another liquidity-scheme by the Europeans?

valley chick's picture

Maybe rumors again of a French downgrade...

Freegolder's picture

You said:


In other news, don't forget to add €210 billion in net "assets" to the ECB's already record balance sheet of €2.494 trillion, bringing it to a fresh new record of €2.7 trillion'


I say, please have a look at the figures produced each week. They are for the Eurozone as a whole, including all central banks. One day, one day, you will acknowledge that, maybe?


The ECB is NOT the Fed.

trebuchet's picture

so, LTROs = funding to cover the next set of write downs?

falak pema's picture

why is the Frankfurt based bank a greater hedge fund than the BofJ, BofE? FED???

Its beyond my comprehension. Granted its a hybrid structure today. But if reality is bootstrapped to give it de facto fiscal backed clout, not yet there, but in pipeline, then why should the world consider it more dicey HF than the FED. Agreed its Math is impossible, but so is that of Japan, UK, USA. They are all wallowing in inextricable debt and they are all totally incestuous, which makes it the SAME financial construct. SO why beat one bank, knowing full well its ALL the central banks who are joint and several.

Unless you consider "exorbitant privilege", a totally "political" historical reality, as valid "economic" argument, to justify FED's unique role in the 'invisible handed market'. The market IS totally manipulated by the Oligarchs, the GS cabal. Its not ZH who will contradict this "de facto" reality...

Dcheeth2's picture

In this respect, its possible that the difference is in the fact that the Fed, BofJ & BofE can print and monetise their way through difficult storms. The ECB can't. Its that simple, they are loaning out shite free air not paper cash created on the printing press.  

So, they are most likely hedging their bets on there being growth in three years, to get this money back.

vegas's picture

Questions? And they call this a solution? I suppose if you try and confuse everybody, nobody will ask why the hell you don't solve the crisis and stop this bullshit. Oh wait, that's right, to solve it Vampire Squid et al has to take a bond haircut and we can't have that. Better for the entire continent to suffer for a generation or two so that bankers can get their bonuses. This is fucking pathetic.

dcb's picture

OK, some background is in order here, and I foillow this stuff on a regular basis. all of a sudden this phrase ltro has appeared without much background on what it is. I know there is some ecb program to lend at 1% for three years unlimited liquidity. Is this that program. If it is I don't understasnt the bid/ ask stuff. that's a bond type auction from what it sounds like. WOULD SOMEONE PLEASE EXPLAIN STRUCTURE OF SAID LTRO. SORRY ZH, BUT THERE ARE AT TIMES YOU DON'T PROVIDE ENOUGH INFO ON THINGS AND ASSUME EVERYONE KNOW WTF.

AngryGerman's picture


maybe start  by reading this:

Tyler Durden's picture

LTRO has been covered extensively in the past two weeks

trebuchet's picture

bifurcation not carry  trade: roll short term quality for long term ECB money while dumping sovs....  not dealing with underlying fundamentals (obviously) but still marginally positive

bnbdnb's picture

EUR/USD 1.20 in a week, maybe two.

dereksatkinson's picture

Another LTRO is late february.  wow.. 

EZYJET PILOT's picture

It annoys when they pretend that this will stimulate lending to households. They always mention this in their analysis for obvious reasons, namely to appease the sheeple. There is no way in the world any of this will find it's way into anything but risk inflating measures.

Yen Cross's picture

 I just want to refinance the ass end of the horse!