Euro lenders park record sums of deposits at ECB

Euro lenders park record sums of deposits at ECB

FRANKFURT - Agence France-Presse
Euro lenders park record sums of deposits at ECB

The Euro sculpture is pictured in front of the headquarters of the European Central Bank in Frankfurt. REUTERS photo

Crisis-hit eurozone banks parked a record 528.18 billion euros ($675.60 billion) overnight at the European Central Bank (ECB), data showed yesterday, suggesting the crucial interbank market is clogged.

Banks have been stashing record sums almost daily at the ECB, nervous of lending to each other, despite the fact they earn only 0.25 percent for their deposits at the Frankfurt-based central bank.

The previous record was published only on Tuesday, when banks parked 502 billion euros overnight.

The phenomenon appears particularly significant because it comes after eurozone banks borrowed nearly half a trillion euros from the ECB last month via a brand new three-year lending facility.

In another development, Fitch ratings agency said it could downgrade its credit assessment of struggling Italy by two notches by the end of the month. “It is one of the possible options,” Fitch official Alessandro Settepani said yesterday, speaking in Milan.

In December, Fitch said it was reviewing six eurozone countries - Belgium, Spain, Slovenia, Italy, Ireland and Greek Cyprus - on the basis that their ratings were “subject to a heightened probability of downgrade in the near-term.”

On Friday, Standard and Poor’s cut Italy’s rating by two notches to BBB+ as part of an overhaul which saw it cut nine out of the 17 eurozone nations, including France and Austria.