Weak TLTRO demand makes ECB's balance sheet target tough to reach - Reuters Poll
(Reuters) - Banks will borrow just 150 billion euros (119 billion pounds) at the second tranche of the European Central Bank's long-term cash offer in December, a Reuters poll forecast, suggesting the central bank will have trouble expanding its balance sheet.
ECB chief Mario Draghi wants to restore the ECB's balance sheet to its March 2012 level of around 3 trillion euros, compared with 2 trillion euros now. The aim is to bring dangerously low inflation back to 2 percent.
Eleven of 19 euro money-market traders in the poll expected the expansion plan to be effective if achieved, but they said the central bank will not reach its goal without a full-scale government bond-buying programme.
The soc-called targeted long-term refinancing operations is one of several measures the ECB has announced over the past six months. None included outright purchases of government bonds, a move Germany opposes.
Monday's poll predicted borrowing of 150 billion at the second TLTRO tender in December, which would bring total lending under the programme to 232.6 billion - well short of the 400 billion offered.
It is also less than the 287.2 billion outstanding from the euro crisis loans banks must repay by February, which together would mean a net contraction of the balance sheet.
The programme is also falling short of another target - increasing bank lending to the private sector. Eleven of 19 traders polled do not expect the new long-term loans to boost bank lending; the remaining eight said it would.
The survey also showed banks are expected to borrow 107.0 billion euros at the weekly tender and 8.0 billion at the three-month tender, more than the 102.6 billion and 7.2 billion maturing this week.
Banks are expected to repay 4.5 billion euros next week of the old crisis loans, less than the 8.5 billion they will pay back this week.
(Reporting by Rahul Karunakar; Polling by Hari Kishan; Editing by Larry King)
