Eonia Mystery Solved? Spike Tracked Greek Bank’s Loans
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National Bank of Greece loaned excess cash at elevated rates
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Eonia was set 5 basis points lower Friday, paring recent rise
A sudden spike in the interest rate for overnight loans between European banks may have been the result of excess liquidity injected into the market by Greece’s second-biggest lender at above-average rates, according to two bankers with knowledge of the matter.
National Bank of Greece SA had excess liquidity of around 450 million euros ($535 million) this week, which it loaned to its peers in the country, the people said. While the flood of funds and the increase in interbank lending in Greece is good news, the rates at which borrowers from the country can access funds are still higher than for the rest of the continent, thus pushing up the weighted average of the overnight rates in Europe, one of the people said. A National Bank of Greece spokesman couldn’t be reached for comment…
Eonia Mystery Solved? Spike Tracked Greek Bank’s Loans
