New TLTROs Should Be Attractive To Banks: Deutsche Bank

The ECB’s new Targeted Long Term Refinancing Operations (TLTROs) unveiled this month should help ease credit conditions for banks by enhancing their attractiveness and reducing the stigma attached to their use relative to the previous version, believe analysts at Deutsche Bank. Abhishek Singhania said in his March 23 research note titled “TLTROs: Improved design but will it be more effective” that he anticipates that TLTRO will be around EUR 520 billion.

New TLTROs: Banks can borrow much more

Singhania argues that the new TLTRO should contribute to the easing of credit conditions for banks in the Eurozone. However, the analyst highlights two areas of significant uncertainty: (a) the potential take-up of liquidity by banks given regulatory pressures and (b) the impact of this on credit creation...