By Patrick Jenkins and Camilla Hall in Abu Dhabi
Italy?s banks, led by UniCredit, were the biggest users of the special three-year funding mechanism launched by the European Central Bank in December, according to a research report.
UniCredit – Italy?s biggest bank by assets – took 12.5bn euros of three-year money under the facility, closely followed by Intesa Sanpaolo, with 12bn euros, and Monte dei Paschi di Siena, which took 10bn euros, says the report from analysts at Morgan Stanley.
The data, submitted to Morgan Stanley but not previously disclosed, underline just how reliant banks in some eurozone nations have become on emergency mechanisms put in place by the European authorities.
It will also stoke the gratitude of the Italian financial system towards Mario Draghi, who took over as president of the ECB in November, instituting the funding mechanism soon afterwards.
Banks across the eurozone periphery have been frozen out of commercial funding markets for months, as investors have shied away from all but the most trusted bond issuers.
Other big users of the ECB?s three-year facility included Spanish banks and Royal Bank of Scotland, which tapped it for 5bn euros via its Dutch subsidiary – equivalent to a quarter of its 2012 funding needs, according to Morgan Stanley. The take up of ECB money by the big Italian banks – amounting to more than 50bn euros in aggregate – means they have already covered 90 per cent of their total funding needs for 2012.
Supporters of the scheme say it has been a vital crutch to ensure eurozone economies continue to function as banks reinvest the money in lending to businesses and governments.
After an initial hoarding of cash, the total of 489bn euros raised by more than 500 banks in the December auction has been put to work. Emergency deposits with the ECB have fallen from a peak of more than 450bn euros early in the new year to 395bn euros now.
A second three-year ECB funding auction takes place on February 28. Speaking yesterday in Abu Dhabi, Mr Draghi predicted that take up of funds in the second round would be ?probably lower than the first but very high, still very high?.
Morgan Stanley predicts banks will take as much as a further 400bn euros of ECB three-year funding. Analysts believe a two-tier banking system may now be emerging, comprising groups that have access to normal commercial bond funding and those that are reliant on artificial systemic support.
There has been a flurry of unsecured debt issuance in the first few weeks of January but only top-rated banks have had access to the market. Mr Draghi said the issuance was ?encouraging?.
Additional reporting by Ralph Atkins in Frankfurt
? The Financial Times Limited 2012