Big win for smaller banks as ECB overhauls collateral requirements

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By Bill Thornhill, Tyler Davies
08 Apr 2020

Market participants are expecting a gigantic take-up in the next round of the European Central Bank's Targeted Longer-Term Refinancing Operations (TLTRO III), after the central bank said that it would accept a much broader range of assets as collateral in the scheme. Smaller banks are likely to be among the biggest winners, with the new criteria helping them to look after their liquidity coverage ratios.

The ECB said on Tuesday that it had adopted an “unprecedented set of collateral measures to mitigate the tightening of financial conditions” during the Covid-19 pandemic.

The changes mean that banks will be able to use foreign currency loans and any loans covered by government guarantee ...

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