Earlier, in the first bid nearly 500 banks participated to get $648bn (€489bn) for three years at 1% interest annually.
The ECB is providing the debt by auction , with less than a quarter of the 4.3% average interest rate catered by European banks on all maturities in the past years, to overcome the liquidity problem of European banks, reported Bloomberg citing Commerzbank AG.
Banks such as Royal Bank of Scotland Group, BNP Paribas SA (BNP) and Societe Generale SA are in queue, in the second bid to bag the huge amount from ECB, in an effort to avert a credit crunch.
According to an assessment by Morgan Stanley, banks may be able to save €120bn over three years, with the lending expected to touch €1.2 trillion after the second auction. This will raise the profits of Spanish and Italian banks by about 10% in 2012.
International Centre for Financial Regulation lobby group research director and Citigroup former managing director Richard Reid was quoted by the news agency as saying that the central bank has pumped the market with unbelievably cheap money because wholesale markets are closed.
"Stronger banks will inevitably profit, but that is a secondary issue for the ECB," said Reid.
With the proposed lending of nearly €680bn debt at the second, the total debt issued by ECB would reach substantially to €1.2 trillion.
