ECB To Discuss Blocking Banks From Multibillion Windfall As Fates Rise (FT)

The FT reports that “the European Central Bank is looking at ways to stop banks earning billions of euros of extra profit from the ultra-cheap lending scheme it launched during the pandemic once it starts to raise interest rates later this month.”

• “The €2.2tn of subsidised loans provided by the ECB to banks helped to avert a credit crunch when the Covid-19 crisis hit. But with the central bank now planning to raise rates it is set to provide a bonanza of extra earnings worth up to €24bn for eurozone lenders, according to analysts.”
• “The ECB’s governing council is due to discuss how it could curb the extra margin that hundreds of banks will be able to earn from its subsidised loans by simply placing them back on deposit at the central bank, according to three people familiar with the plans.”