Barclays taps ECB for €8.2bn of cheap money

[AtW]

Source: Barclays taps ECB for €8.2bn of cheap money - Telegraph

[Harmonic]

The Ashes must be more lucrative than I thought if the ECB's got that kind of cash

[Zoiderman]

The Ashes must be more lucrative than I thought if the ECB's got that kind of cash

I think it's a wheeze. Borrow it at 0.5%, loan it out to Italy at 7% and if it all goes tits up, you take a haircut at 50%, and still return 3.4%

They give out big bonuses for this?

[ThomasSoerensen]

I think it's a wheeze. Borrow it at 0.5%, loan it out to Italy at 7% and if it all goes tits up, you take a haircut at 50%, and still return 3.4%

They give out big bonuses for this?

Do you really think the "haircut" is of the interest.

In reality the haircut is on the principal amount and the calculation would look something like this:


Borrow for 1 year from ECB 8,200,000,000.00
Interest 0.5% 41,000,000.00
Total promise to pay back to ECB 8,241,000,000.00


Lend to Italy 8,200,000,000.00
Interest 7% 574,000,000.00
total expectation of payback from Italy 8,774,000,000.00

Expected profilt on transaction 533,000,000.00


In case of bailout
Bailout agreement of 50% haircut on principal -4,100,000,000.00

Total realised payback from Italy 50% principal and all interest 4,674,000,000.00
Total to pay back to ECB 8,241,000,000.00
Loss on transaction -3,567,000,000.00

I ewally hope they don't pay big bonuses for this kind of "result".

[Zoiderman]

Do you really think the "haircut" is of the interest.

In reality the haircut is on the principal amount and the calculation would look something like this:


Borrow for 1 year from ECB 8,200,000,000.00
Interest 0.5% 41,000,000.00
Total promise to pay back to ECB 8,241,000,000.00


Lend to Italy 8,200,000,000.00
Interest 7% 574,000,000.00
total expectation of payback from Italy 8,774,000,000.00

Expected profilt on transaction 533,000,000.00


In case of bailout
Bailout agreement of 50% haircut on principal -4,100,000,000.00

Total realised payback from Italy 50% principal and all interest 4,674,000,000.00
Total to pay back to ECB 8,241,000,000.00
Loss on transaction -3,567,000,000.00

I ewally hope they don't pay big bonuses for this kind of "result".

Haha, indeed, didn't think that one out....