LONDON (Reuters) - Britain’s Barclays (BARC.L) tapped Europe’s central bank for 8.2 billion euros ($10.9 billion) of cheap funding this week, marking a U-turn for the bank as it had been worried about the risk of political interference from taking funds.
Barclays did not take any cash at the previous offer in December, and had indicated it had no plans to take any funds.
It said on Friday the money would be used to manage funding gaps in Spain and Portugal, with 6.2 billion of the funds earmarked for Spain. That is seen as a more efficient way to fund local operations than by providing sterling-denominated funds from headquarters, especially if there are further problems in the euro zone.
The bank said any funding benefit would be ring-fenced and “not contribute to the remuneration of any personnel”.
Some 800 banks took 529 billion euros of cheap money from the European Central Bank on Wednesday, with the offer aimed at ensuring no banks collapse from a lack of liquidity and restoring investor confidence.
But some banks have turned down the cash and say stronger lenders should show they are able to stand on their own.
Barclays CEO Bob Diamond said earlier this month the offer of cheap cash had been “very positive” in restoring market confidence.
But the bank has been wary of the risk of political interference from taking any help from the state, given rising interference in the running of state-backed rivals Royal Bank of Scotland (RBS.L) and Lloyds (LLOY.L).
Lloyds said it took 13.6 billion euros on Wednesday after passing the first offer. HSBC (HSBA.L) took 5.2 billion euros in December, mainly to fund its French operation, and about 350 million on Wednesday. RBS is expected to have taken some cash. ($1 = 0.7501 euros)
Reporting by Steve Slater; Editing by Mark Potter and Hans-Juergen Peters