The latest rate rise means the ECB’s annual income on the €120bn loaned to our bailed-out banks is up €600m since the start of the year — an increase equal to about 15pc of the €4bn austerity package to be unveiled in the Budget.
The ECB money is loaned to Anglo Irish Bank, Irish Nationwide, EBS, AIB, Bank of Ireland and Permanent TSB. All the institutions, bar Bank of Ireland, have been effectively nationalised so their higher costs are ultimately borne by the taxpayer.
The banks are being propped up with €70.9bn of liquidity from the ECB’s “main” operation, plus about €50bn in “Emergency Liquidity Assistance” administered by the Central Bank of Ireland and funded by the ECB.
The ECB was charging 1pc interest for the liquidity supports at the start of the year but that rate rose to 1.25pc after April’s rate hike and is expected to increase by another 0.25pc this month.
(Courtesy of Independent.ie)