The European Central Bank (ECB) has announced that 27 European financial entities have committed to return 3.484bn euros on February 6th in what will be a second round of repayments from last year's Long-Term Refinancing Operations (LTROs).

On Thursday, the first repayments were disbursed. On that occasion, 278 banks planned on returning €137.2bn to the central bank.

The ECB issued two rounds of LTROs on December 2011 and February 2012 for more than one trillion euros in an effort to provide liquidity to banks across the continent. As of now, banks will have the option to repay the three-year loans once a week.

However, expectations were for banks to repay an amount closer to €20bn next week. The news dampened sentiment on Friday, with markets pulling back from their intraday highs.

"Traders are now tempering their earlier optimism about the overall state of the banking sector which may not be as healthy as thought last week," said market strategist Ishaq Siddiqi from ETX Capital.

JM

Related share prices