By DEREK SCALLY
The European Central Bank is investigating claims it applies different rating standards and charges different risk premiums in liquidity programmes for Spanish and Irish banks.
An investigation by Germany’s Welt am Sonntag newspaper claimed the ECB is applying a more lax standard to Spanish bank loan applications, allowing them borrow money at better terms than Irish lenders.
The investigation looked at the conditions applied to the ECB’s loan buy-up programme, totalling €80 billion. Introduced at the height of the crisis, the programme allows banks to source unlimited liquidity from the Frankfurt bank at an interest rate of 0.75 per cent, with banks providing sovereign bonds as collateral.
The newspaper reported that Spanish banks have received loans of €16.6 billion.
The bonds offered as collateral – 18-month treasury bonds, or T-bills – have a second-to-best “B” risk rating from the big three ratings agencies: Fitch, Moody’s and Standard Poor’s…………………………..
full article at source: http://www.irishtimes.com/newspaper/finance/2012/1105/1224326142339.html
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