EZ TLTRO 3 to show whether demand for loans is rising

On 19 March the European Central Bank (ECB) will announce the third allotment of the Targeted Long Term Refinancing Operation (TLTRO). 

Banks borrowed EUR 212bn, a little more than half of total available in the first phase (September and December 2014). The third allotment marks the beginning of the second phase of the TLTRO programme. 

During this phase, each bank can apply for additional funding depending on the evolution of its lending activities against a specific benchmark. 

The ECB removed the 10bps spread above the Main Refinancing Operations rate (MRO) at its January meeting, making TLTROs as cheap as possible. 

According to a Reuters poll, take-up is expected to be about EUR 40bn. Strong take-up would indicate strengthening demand for loans in the euro area.