March 17, 2020 / 11:53 AM / 21 days ago

ECB to lend banks 109 billion euros in new crisis fighting tool

FRANKFURT (Reuters) - The European Central Bank will provide banks 109.1 billion euros ($120.3 billion) in its first ultra-cheap loan offer designed to help companies weather the coronavirus crisis, it said on Tuesday.

Designed as a bridge finance facility for struggling firms, the credit will be offered to banks at a rate of minus 0.5%, essentially paying them to take central bank funds.

The facility will mature on June 24 and banks will then have the option of rolling the cash into a three-year targeted longer term refinancing operation, which has a rate as low as minus 0.75%.

Banks have been repaying their ECB credit in recent months as the economy slows and last week said they intend to return 92.6 billion euros ahead of time from a previous facility.

The ECB hopes to arrest these repayments with improved terms so banks continue to fund the real economy.

Reporting by Balazs Koranyi

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