Sept. 27 (Bloomberg) --
The European Central Bank lent the most money at its penalty rate in almost three years, suggesting at least one bank is still being shut out of credit markets.
The ECB loaned 3.9 billion euros ($5.5 billion) at its marginal rate of 5 percent yesterday, the most since October 2004, the Frankfurt-based central bank said in a daily borrowing-requirement statement today. It didn't provide details of which bank or banks asked for the money.
``No-one knows where the bodies are buried
,'' said Stuart Thomson, who helps oversee about $46 billion in bonds at Resolution Investment Management in Glasgow, Scotland. ``It's likely that money markets are going to be in a state of shock for some time to come
.''
Banks are struggling to raise money as the credit slump makes financial institutions reluctant to lend to each other. The rate banks pay one another for three-month money in euros rose to 4.79 percent today, a six-year high, according to the British Bankers' Association. The ECB has held seven special auctions to help cash-strapped banks since Aug. 9.
The central bank's difficulties in restoring confidence to the money markets will probably prevent policy makers from raising the benchmark rate, currently at 4 percent, anytime soon, said David Page, an economist at Investec Securities in London. The central bank is scheduled to announce its next rate decision on Oct. 4.
``While illiquidity remains and money markets continue to function improperly we do not believe the ECB has any desire to rock the boat,'' said Page.
U.K. Banks Reluctant
In the ECB's seven-day refinancing operation on Sept. 25, the gap between the marginal rate, or the rate of the lowest accepted bid, and the central bank's benchmark rate rose to the highest since markets seized up on Aug. 9. The spread rose to 27 basis points, or 0.27 percentage point, from 15 basis points at last week's operation.
In the U.K., banks have been reluctant to turn to the Bank of England for emergency funding on concern it would fuel speculation they are in financial difficulty. Barclays Plc had to deny it faced liquidity problems last month after twice tapping the central bank's emergency overnight-lending facility. A 10 billion-pound ($20 billion) auction of three-month money at a minimum rate of 6.75 percent by the Bank of England yesterday failed to muster any bids.
``Institutional lenders are likely to remain skittish in this environment,'' said Lena Komileva, an economist at Tullett Prebon in London. ``There is no quick fix in the pipeline at least until the year-end.''
The overnight rate for euros fell 18 basis points to 4.17 percent, the BBA said today, while the corresponding rate for pounds climbed 14 basis points to 5.8 percent. The three-month rate for pounds dropped 1 basis point to 6.31 percent.
Che casotto 'sta nuova crisi...è da capire se quanto sta accadendo è fisiologico o se invece è l'indicazione di un malessere piu profondo...l'unbundling di strutturati complessi, l'esposizione dei retail, il leverage di private equity ed hf qualche pensierino lo danno.....nel dubbio...non ci capisco molto
ce Presta a Banche 3,9 Mld a Tasso 5%, Massimi 4 Anni
