MADRID, Jan 14, 2013 (AFP) - The debt owed by Spanish banks to the European Central Bank fell in December for the fourth straight month, official data showed Monday, a sign that Spanish lenders are having an easier time financing themselves on the interbank market.
Net borrowing dropped 8.1 percent to €313.1 billion ($417.7 billion) in December from the previous month, the Bank of Spain said. Borrowing was up sharply, however, from the December 2011 figure of €118 billion.
Borrowing by Spanish banks from the ECB hit a record high of €388.7 billion ($518.6 billion) in August last year when Spain was at the frontline of the eurozone debt crisis.
The growing reliance on the eurozone’s central bank was fuelled by the ECB’s decision to pump more than €1.0 trillion in cheap loans into the European banking system.
The ECB extended the money in two operations in December 2011 and February 2012 as it sought to avert a dangerous credit squeeze tightening around the bloc.
In early September, the ECB offered a new lifeline to stricken member states, saying it would buy their sovereign bonds on the open markets so as to curb high borrowing rates.
But the offer depends on the recipient nations first applying for help from the eurozone’s new bailout fund, the European Stability Mechanism, and submitting to its strict conditions. That is a step Spanish Prime Minister Mariano Rajoy’s government hesitates to take.
Spain secured a rescue loan in June of up to €100 billion from its eurozone partners for its banks, which are struggling with a surge in bad loans following the collapse of a property bubble in 2008.
