ECB pumps euro30B into money markets
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FRANKFURT, Germany—The European Central Bank has pumped euro30 billion ($42.6 billion) into nervous money markets because of the volatility and concern over the bankruptcy of Lehman Brothers Holdings Inc.
The bank said Monday that it offered a quick one-day tender earlier in the morning with a minimum bid rate of 4.25 percent. The bank received 51 bids for euro90.3 billion ($127 billion), a clear sign that demand for cash is over the top.
Similarly, the Bank of England in London said it offered up 5 billion pounds (nearly $9 billion, euro6.4 billion) in a three-day auction while the Zurich-based Swiss National Bank said it was also providing liquidity in "a generous and flexible manner" at an overnight rate of 1.9 percent, but wouldn't say how much was on offer.
THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP's earlier story is below.
FRANKFURT, Germany (AP) -- Europe's major central banks moved to calm volatile markets Monday by providing more cash to a jittery banking system in the wake of Lehman Brothers Holdings Inc.'s decision to seek bankruptcy protection.
Global stock and credit markets have been roiled by the decision, which came after last ditch talks to find a suitor for the Wall Street institution collapsed this weekend.
The 158-year-old Lehman was crippled by $60 billion (euro42.2 billion) in soured real-estate holdings and unable to find an investment partner to throw it a lifeline.
In a brief statement, the ECB, the central bank for the 15 countries that use the euro said "The ECB continues to closely monitor the conditions in the euro area money market. The ECB stands ready to contribute to orderly conditions in the euro money market." The Frankfurt-based ECB called for bids in one-day quick tender at a minimum rate of 4.25 percent. It did not disclose how much it was making available.
Similarly, the Bank of England in London said it offered up 5 billion pounds (nearly $9 billion, euro6.4 billion) in a three-day auction while the Zurich-based Swiss National Bank said it was also providing liquidity in "a generous and flexible manner" at an overnight rate of 1.9 percent, but wouldn't say how much was on offer. It was the first time that the Swiss bank offered up additional money since February.
The bank said it also had weekly money on offer at the same rate.
A spokesman at the Swiss bank said it was flexible enough that it could add liquidity depending on the demand.
On Sunday, a global consortium of banks, working with government officials in New York, announced a $70 billion (euro49.7 billion) pool of funds to lend to troubled financial companies with the aim of preventing a worldwide panic on stock and other financial exchanges.
Ten banks -- Bank of America, Barclays, Citibank, Credit Suisse, Deutsche Bank, Goldman Sachs, JP Morgan, Merrill Lynch, Morgan Stanley and UBS -- each agreed to provide $7 billion (euro5 billion).
The U.S. Federal Reserve also chipped in with more largesse in its emergency lending program for investment banks. The central bank announced late Sunday that it was broadening the types of collateral that financial institutions can use to obtain loans from the Fed.
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