ECB Wants to Deprive Banks of Huge Windfall

The European Central Bank is investigating ways to prevent banks from turning a profit from subsidized credit programs launched during the corona pandemic. That writes the British newspaper Financial Times, referring to the imminent benefit from interest rate hikes.


During the corona crisis, the ECB provided 2.2 trillion euros in subsidized loans to banks to prevent a credit crisis. With interest rates rising, it will bring up to €24 billion in additional profits for eurozone lenders, the analyst-based FT said.

The ECB board is considering measures to limit the advantage for banks. This can be done, for example, by putting the money back at the central bank, the newspaper reports, citing people who are familiar with the plans.

The ECB plans to raise interest rates for the first time since 2011, after already announcing details of planned rate hikes in July and September June. More interest rate steps may follow. Providing taxpayer-backed profits to banks, while rising borrowing costs for households and businesses, would be “politically unacceptable” for the ECB, the paper said.

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