Banks Park €2.7 Trillion at ECB as Provisioning Remains Light

The European Central Bank said commercial lenders placed about €2.7 trillion in its overnight deposit facility on 19 August, underscoring the abundance of excess liquidity in the euro-area financial system. By contrast, banks tapped only €4 million from the ECB’s marginal lending window, a negligible amount that indicates limited short-term funding stress. Separately, Europe’s biggest banks have been setting aside less capital than analysts anticipated to cover potential defaults on deteriorating credit portfolios. The combination of lighter-than-expected loan-loss provisions and the continued parking of large cash balances at the ECB suggests that, for now, the region’s lenders remain confident in their balance-sheet strength despite a weakening economic backdrop.