European Central Bank President Mario Draghi (R). Photo: Reuters, Ralph Orlowski

The European Central Bank gave out EUR 233 billion in long-term low-interest loans. More than 10% of the total, or EUR 24 billion went to Italy’s largest bank Unicredito. This was the largest distribution under the ECB’s long-term lending facility since it was established. European bank stocks surged, reaching their highest level since December 2015.

The weakest banks – the Italians and Spanish – are the best performers over the past week. Not that any of this will benefit the European economy: bank lending in Italy continues to shrink (down 2.2% in 2016) as well as in Spain (down 4% in the 12 months through January 31). Banks will use the ECB’s largesse to finance carry trades in government bonds. Higher-yielding European sovereigns rallied on the news.

Asia Times Financial is now live. Linking accurate news, insightful analysis and local knowledge with the ATF China Bond 50 Index, the world's first benchmark cross sector Chinese Bond Indices. Read ATF now.