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Banks up use of ECB deposit facility, trim borrowing

Tue, Oct 7 2008, 08:00 GMT
http://www.afxnews.com

FRANKFURT, Oct 7 (Reuters) - Banks upped the amount they deposited in the European Central Bank's overnight facility, figures showed on Tuesday, at the same time trimming back their use of an emergency borrowing facility.

Banks borrowed 13.56 billion overnight as of Oct. 6, the ECB said, down from 24.592 billion euros the previous day. In comparison 42.55 billion euros was deposited, up from Monday's level of 38.854 billion. (For full details click on Reuters information page)

The amounts passing through the facilities remain high. The problems in money markets are forcing banks to turn to central banks for funds as normal interbank lending markets remain virtually frozen.

Banks try to avoid using the ECB's permanent overnight lending and borrowing facilities because the 5.25 percent borrowing rate and 3.25 percent deposit rate are punitive compared with the rates usually available on interbank markets.

(Reporting by Marc Jones; editing by David Stamp)

marc.jones@thomsonreuters.com; +49 (0)69 7565 1219; reuters messaging: marc.jones.reuters.com@reuters.net))

($1=.7170 Euro)

Keywords: ECB/MARGINAL

tf.TFN-Europe_newsdesk@thomson.com

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