Report: Banks Set to Double Borrowing from ECB

European banks plan to borrow at least twice as much money from the European Central Bank as they did in December, the Financial Times reported Tuesday, a sign of further stress in the sector.

"Several of the Eurozone’s biggest banks told the Financial Times that they could double or triple their request for funds" when the ECB makes its second round of exceptional three-year loans on February 29, the report said.

"We should have done more (the) first time," when more than 500 banks snapped up a record 489 billion euros ($644 billion) on December 21, the daily quoted the head of a Eurozone bank as saying last week at the World Economic Forum.

The ECB has massively boosted the amount of central bank funds it lends to Eurozone banks at the ultra low rate of 1.0 percent to prevent a crucial interbank lending market from seizing up.

Banks have once again begun to curb lending to each other amid concern that borrowers might not be able to pay back the loans, forcing the ECB to assume the role of lender of last resort.

Much of the money has nonetheless be parked back in ECB coffers in the form of poorly-remunerated overnight deposits because that is also the safest place for commercial banks to stash excess cash.

Analyst say some of the funds have nonetheless been used to purchase eurozone government bonds, easing pressure on heavily-indebted members, though bond yields climbed Monday for many southern countries considered most at risk of default.