December 20, 2011 / 8:29 PM / 7 years ago

Exclusive: Main Italian banks to tap ECB 3-year loans

MILAN (Reuters) - More than 10 Italian banks, including major lenders, are looking to apply for the European Central Bank’s new ultra-cheap three-year loans by using state-guaranteed bonds as collateral, a source close the situation told Reuters on Tuesday.

A second source confirmed all the main Italian banks had requested state guarantees for bank bonds under a new scheme -launched by Italy’s emergency government - aimed at lowering funding costs for lenders.-

“There has been interest in state-guaranteed bonds. There have been requests by more than 10 banks that were approved. Banks are doing this ... to present it as collateral for the ECB loans,” one of the sources said.

The ECB is launching its first ever offer of unlimited, ultra-cheap three-year funding to banks on Wednesday in a bid to help lenders lower their funding costs.

Italian banks have increased their reliance on cheaper borrowing by the ECB after being effectively shut out of AAPL.O wholesale debt markets because of a funding squeeze.

UniCredit’s (CRDI.MI) Chief Executive Federico Ghizzoni said last week the bank was considering whether to use the new ECB’s 3-year loans.

The ECB expects strong demand for its 3-year loans, with a Reuters poll indicating a median estimate of 250 billion euros. Gianluca Garbi, chief executive of Italy’s Banca Sistema said in a Rai TV show on Tuesday he expected the ECB to lend 450 billion euros, well above estimates, with Italian banks tapping 70 billion euros, or around 15 percent of the total.

UniCredit, Italy’s most internationally exposed lender, is lining up its third capital increase since 2008 as the euro zone’s third-largest economy is hit by the bloc’s debt crisis.

The ECB hopes its first ever limit-free, ultra-cheap and longer funding will help bolster trust in banks, ease the threat of a credit crunch and tempt banks to buy Italian and Spanish debt.

Additional reporting by Gabriella Bruschi; editing by Silvia Aloisi and Andre Grenon

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