Banks will initially be able to borrow up to seven per cent of a specific part of their loans in September and in December, the European Central bank said last week.

The ECB released further technical details of a series of targeted longer-term refinancing operations (TLTROs), announced on June 5. The TLTROs are designed to enhance the functioning of the monetary policy transmission mechanism by supporting bank lending to the real economy.

After the seven per cent has been borrowed, additional amounts can be borrowed in further TLTROs, depending on the banks’ eligible lending activities in excess of bank-specific benchmarks.

The additional allowance is limited to three times the difference between the net lending since April 30 and the benchmark at the time it is claimed.

The ECB explained that for banks that exhibited positive eligible net lending in the 12-month period to April 30, the benchmarks are always set at zero.

For banks that exhibited negative eligible net lending in the year to April 30, different benchmarks apply.

Banks that borrow in the TLTROs and fail to achieve their benchmarks as at April 30, 2016, will be required to pay back their borrowings in full in September 2016.

The initial operations will be conducted on September 18 and December 11, with the additional operations carried out in March, June, September and December 2015 and in March and June 2016.