March 20, 2012 / 2:52 PM / 6 years ago

ECB's Praet: harder for banks to profit from lending

FRANKFURT, March 20 (Reuters) - Banks will find it harder in future to earn money from the previously-favoured practice of piecing together cheaper short-term funding and lending it longer-term for a profit, European Central Bank Executive Board member Peter Praet said on Tuesday.

“The maturity transformation business of banks is going in the future to be more difficult, because they have to have a more maturity matched portfolio,” Praet said in a panel discussion at the Frankfurt Finance Summit.

Banks generally make money by borrowing funds for short term and lending it out for longer periods, pocketing the difference in the interest rates. (Reporting by Sakari Suoninen)

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