European Central Bank HQ - Frankfurt am Main, Hesse, Germany
Several leading European banks decided against the option of borrowing from the European Central Bank (ECB) despite the attractive terms on offer, it has emerged.
According to the Wall Street Journal, a number of major financiers felt they may be perceived as bailout recipients if they signed up under such an arrangement.
In December last year, the ECB decided to make a raft of new three-year loans available for institutions struggling to adjust in the aftermath of the recession in order to boost fluidity in the banking arena.
This led to a huge take-up from many lenders, with 523 companies borrowing a combined total of some €489 billion ($644 billion) for three years at an interest rate of just one per cent.
However, even though such loans were widely seen as an unmissable opportunity, some officials in the sector thought their company's reputation may suffer if they took advantage.
This comes after Bloomberg reported that the European Banking Authority is considering changing rules relating to sovereign debt holdings.
By Claire Archer
