Nordea says there is a possibility....>

EUROZONE VIEW: Nordea says there is a possibility that the ECB balance sheet

could start to contract before the end of its QE programme "leaving financial

markets vulnerable to unforeseen shocks and a loss of confidence".

- Nordea highlight that the first early repayment of the ECB's 4-yr TLTRO's is

due in June and that if banks decide to pay back some of the E400bln borrowed at

the same level as the repayment of the 3-yr ECB loans back in 2013, then it

would amount to E110bln.

- "Given the ECB is on the final stretch of its net bond purchases, the

remaining bond purchases may never be able to compensate for the flow of early

TLTRO repayments." 

- Therefore Nordea say the ECB balance sheet could start to fall as early June,

before end of QE and well ahead of any initial hike in rates, unlike the Fed

which left its balance sheet unchanged for 1.5-years after first rate hike.