Lending to tighten as ECB loans top €44.1bn

IRISH bank borrowings from the European Central Bank (ECB) have doubled over the past 12 months to a record €44.1 billion and they face tougher lending conditions in the coming weeks.

The credit crisis has increased the reliance of eurozone banks on the ECB for funds. At the end of July financial institutions operating in Ireland had outstanding borrowings of €44.12bn from the ECB, up from €39.4bn at the end of December 2007. This is a 102% increase on the €21.85bn Irish banks owed the ECB in July of 2007. This compares with Spain whose banks had borrowed a record €49.4bn in July.

It is expected the ECB will announce changes to the rules governing its money-market auctions by tightening the collateral framework that underpins the loans it gives to eurozone banks.