UniCredit On Impending TLTRO Headlines

Ahead of the release of the results re: voluntary early TLTRO repayments (shortly after 12:00 CET) UniCredit note that “the residual maturity of TLTRO III.7 (with a residual amount of EUR280bn) will fall below 6 months and the residual maturity of TLTRO III.9 (with a residual amount of EUR90bn) will fall below 12 months, thus negatively affecting their contribution to the NSFR.”

• “However, we do not expect this to be a major driver of banks’ decisions since EBA data indicate that NSFR requirements are comfortably met by European banks.”
• “Furthermore, with excess liquidity set to decline further in the coming quarters as TLTROs progressively mature and the ECB implements quantitative tightening (QT) measures, banks have very limited incentive to depart from liquidity. We expect voluntary early repayments to be EUR 20-30bn, a similar amount to June. Besides voluntary early repayments, the TLTRO III.5 (EUR 66.7bn) will mature. The settlement of repayments is on 27 September.”