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Monday, November 12, 2012

The ECB audit Spain collateral for loans


According to reports, the European Central Bank is currently considering whether to cut the euro area commercial banks as loan collateral debt rating of Spain. ECB spokesman confirmed the bank is reviewing the Spanish loan collateral news. The market worried ECB alleged breach of loan collateral rules about 16.6 billion euros of the bank's assets security risk.

To mortgage rule according to the ECB, the assets of the credit rating of A-level can be used as a credit rating of the collateral in the ECB, and enjoy the lending rate of 0.5%; assets of the rating of the Class B only as two credit rating mortgage goods, the lending rate to 5.5%.

Reported that the ECB's loan collateral audit involves the size of about 80 billion euros in Spain's short-term government bonds, according to the bank DBRS (Dominion Bond Rating Service) system ratings, these bonds were rated A, the Spanish banking 0.5% interest rate loan of 16.6 billion euros from the ECB. Including three international rating agencies Moody's, Standard & Poor's and Fitch, the other major rating agencies, generally given Spain's short-term government bonds Class B rating. This means that, Spanish banks borrowed 16.6 billion euros loan interest rate of 5.5%.

According to the survey of the German World Journal, in Class A rating above 80 billion euros, the ECB in the short-term government bonds of Spain, about 66.5 billion euros of treasury bonds essentially only with a Class B rating qualification; remaining 13.3 billion euros of short-term government bonds, and even does not meet the standard of ECB collateral.

However, the ECB has long insisted that the bank is in strict compliance with the loan collateral rules, and to ensure the security of assets. According to the data of the ECB, since the outbreak of the debt crisis, the behavioral response to the crisis has led to the expansion of the scale of its assets to more than 3 trillion euros, up more than doubled compared to 2008 before the financial crisis.

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