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ECB’s Loans No Panacea for Banks

Unlimited three-year funds entail risks, may not boost bank lending.

By Liam Vaughan, Gavin Finch and Svenja O'Donnell, Bloomberg | Updated on February 27, 2012

European Central Bank President Mario Draghi’s success in quelling a bond-market rout across the euro region’s periphery masks a failure by the region’s banks to bolster their capital.

The ECB will offer a second round of unlimited three-year funds on Feb. 29. Firms will seek 470 billion euros ($629 billion), approaching the 489 billion euro take-up by 500 banks at the first long-term refinancing operation on Dec. 21, the median estimate of 28 analysts surveyed by Bloomberg show.

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