MADRID, Oct 11: Spanish banks’ net borrowing from the ECB fell in September for the first time in a year, the Bank of Spain said on Thursday.

Net borrowing dropped to 378.2 billion euros in September from a record high 388.7 billion euros the previous month. Despite the decline, the figures show that Spanish banks’ dependence on the ECB for day-to-day financing remains at near record levels after a relentless climb from just 42.2 billion euros in April last year.

The growing reliance on the eurozone’s central bank was fuelled by the ECB’s decision to pump more than 1.0 trillion euros in cheap loans into the European banking system. The ECB loaned the money in two operations in December last year and February this year as it sought to avert a dangerous credit squeeze tightening around the bloc.

In early September, the ECB offered a new lifeline to stricken member states, saying it would buy their sovereign bonds on the open markets so as to curb high borrowing rates.

But the offer depends on the recipient nations first applying for help from the eurozone’s new bailout fund, the European Stability Mechanism, and submitting to its strict conditions. That is a step Spanish Prime Minister Mariano Rajoy’s government hesitates to take.—AFP