Greece, Portugal, Ireland and Spain 'driving ECB loans increase'

24 June 2010

The €332 billion ($407 billion) increase in lending by the European Central Bank (ECB) since June 2008 is being chiefly driven by four countries.

Banks in Greece, Portugal, Ireland and Spain have accounted for around €225 billion of the loans – more than two-thirds of the increased amount, according to a report by Royal Bank of Scotland (RBS).

Greece has taken more than $78 billion of this, followed by Spain with €58.4 billion, Ireland with €54.3 billion and Portugal with €34 billion.

Nick Matthews, an economics analyst at RBS, told the Financial Times: "This is a sign of the stress in the system.

"Banks do not want to lend to each other in this climate, which means many have to turn to the ECB."

Outstanding loans to eurozone banks from the ECB currently stand at €844 billion.

Earlier this month, leaders of European Union countries agreed to publish the results of bank stress tests in an attempt to restore confidence in the firms' ability to survive the sovereign debt crisis.

By Tony Aynsley

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