It doesn’t come as much of a surprise that the Spanish financial sector is having to increasingly rely on ECB funding.
However, data released by the Bank of Spain on Tuesday reveals the sheer speed at which this happened:
“Net” is primarily because of the deposit facility. The “main” refinancing operation is (typically) seven-day money, and “longer term” is anything longer than that. The big increase was primarily from the three-year LTROs.
Some additional colour from the rates strategy team at Rabobank on Wednesday morning on the progress of the bailout(s):
It has also been rumoured that Spain will submit its official monetary request for bank bailout funding on Thursday or Friday of this week. This will pave the way for the release of the initial tranche of funding. At the same time Olli Rehn has been quoted as saying that Spain has an ‘open mind’ with regards to a full sovereign bailout. Remember that Rajoy has previously said that he will wait to see the terms of any ECB bond purchase programme before requesting such a bailout.
Concerning the above data from the Bank of Spain:
This emphasises the continual struggles that the Spanish banks are having in funding themselves and the huge role that the ECB now has in funding the banks of the periphery.