Bank fears rise on ECB emergency borrowing spike

Emergency overnight loans from the European Central Bank remained exceptionally high for the second day running on Friday, reinforcing fears that a euro-zone banks could face serious problems with financing.

ECB figures showed banks borrowed over 16 billion euros in high cost of emergency overnight funding - the largest amount since June 2009. The amount compared to the 1.2 billion euro loan for the numbers spiked to more than 15 billion on Thursday.

The ECB gives no breakdown of the loans figures and declined to comment when asked to explain the sudden spike.

Traders were unsure whether the jump was due to a serious financial issue or a bank had an error earlier in the week by not borrowing enough regular weekly subscription of the ECB.

"One can assume that a bank or a group of banks that are not easy money on the open market to get a good rate," said one trader.

A number of banks, mainly from most of the eurozone countries schuld tense, but also troubled banks in key countries, remain excluded from the open money markets and almost wholly dependent on the ECB for funding.

The banks have to pay additional 0.75 percent for overnight funding usually means that it is used only as a last resort.

The surprise jump came just days after the banks their normal weekly injections of the ECB funding.

If a bank missed this week ECB tender, the distortion to last Tuesday when the next one is scheduled.

The last time this week that overnight borrowing more than 10 billion was on June 24, 2009, when it stood at 28.7 billion euros, the highest ever. This year, emergency night included more than 1 billion euros only twice.

The central bank reported the following day data on liquidity, in millions of euros. Click for more details.