Banks will next week repay the European Central Bank (ECB) 12.495 billion euros ($16.34 billion) of two three-year loans they took a year ago, a drop in the payback rate that shows they prefer to hold surplus cash in case financial markets clog up again.

The ECB said yesterday 66 banks had decided to repay funds from the loans on Wednesday, with 4.176 billion euros repaid from the first one and 8.319 billion from the second.

The ECB lent banks a total of more than one trillion euros in loans in December 2011 and February 2012 - a ploy that ECB president Mario Draghi said "avoided a major, major credit crunch".

Banks took 489 billion euros in the first long-term refinancing operations and 530 billion in the second. In January, banks opted to repay the ECB 137.2 billion euros of the first of the twin loans.-Reuters