Commerzbank Touch On Italian Bank Liquidity Matters

Commerzbank note that “it seems that Italian banks did not yet sell BTPs to a larger extent to generate ECB liquidity for the upcoming TLTRO, at least judging by the available data.”

• “The BdI bank balance sheet data released this week shows that the €39 increase in excess liquidity in April was largely achieved via a significant increase in deposits from other euro area banks, which rose by a record €29bn, plus deposits from domestic corporates. BTPs holdings and repo funding were little changed, with modest reductions in BOTs.”
• “The verdict is still out how the excess liquidity increase in May and thereafter is achieved, while more structural adjustments may be needed in view of the BTP Valore competition”