Spanish Business News

MADRID—Spanish banks' use of European Central Bank funding rose for the first time in five months in December, data from the Bank of Spain showed Friday.

Spanish banks raised €66.99 billion ($89.44 billion) in average net funding from the ECB over the month of December, up from €61.138 billion in November and similar to the level in October, the Spanish central bank said.

Including funds placed in ECB deposit facilities, Spanish banks drew gross funds of €69.98 billion from the ECB in November.

Net ECB funding for all euro-zone banks fell slightly to €404.27 billion in December from €409.03 billion in November.

Worries about a potential fallout from Spanish banks' exposure to overvalued real estate has been a key concern of international investors lately and has made it virtually impossible for most Spanish lenders to finance themselves in international markets.

Borrowing from the ECB by Spanish banks spiked over the summer, reaching a record in July of €130.21 billion. It has since dropped sharply as lenders sought other funding sources.

Bankers say that while it remains difficult to find longer term funding from debt markets, the commercial paper market and other short-term markets such as the repurchase market remains open to Spanish lenders.

ECB funding carries a significant stigma because of the central bank's status as a lender of last resort. Sharp increases in ECB lending to a country is therefore an indicator of stress in the local banking system.

Source:  Wall Street Journal