The ECB launched the unprecedented €1 trillion ($1.3 trillion) loan operation in two tranches at the end of 2011 and again in February 2012, in an attempt to relieve stress on banks at the height of the debt crisis in the group of the 17 European Union countries that use the euro.
The ECB's aim was to ensure lenders had enough funding to do business so that the flow of credit to the wider economy wasn't squeezed. The loans have been credited with easing the region's debt crisis by tackling fears that one or more of its shaky banks might fail.
At the time the program was launched, banks were given the option to pay back these loans early, with the repayment window opening at the end of January. Analysts have been eager to see how many banks would join the scheme, as it would give an indication whether parts of the eurozone's financial system were returning to health.
The central bank said Friday that 278 lenders will make early repayments on Jan. 30. Economists' forecasts for repayments had ranged between €100 and €200 billion. In keeping with the ECB's usual practice, the central bank identified neither the lenders involved nor the countries they come from.
As well as helping banks, the loans also provided indirect relief to heavily indebted countries, such as Spain and Italy, which were facing high borrowing costs in bond markets. Flush with cheap credit from the ECB, banks started buying government debt. That raised bond prices and lowered bond interest rates, which equates to lower borrowing costs for the struggling countries.
The ECB lent €489 billion to 523 banks in late December 2011 at what was then its current interest rate of 1 per cent, and another €529.5 billion to 800 banks at the end of February last year.
The ECB's benchmark interest rate was since lowered to 0.75, meaning banks can get short-term funding from the central bank at an even cheaper rate.