ML-Implode News - ECB moves to kill zombie bank financing(!!)

Hat tip to Russ Winter for noticing this:

"Until now, many European governments sought the least costly way to recapitalize their banks. Banks would issue their own bonds, secure a government guarantee for them, and then use them as collateral to borrow from the ECB," Chandler wrote in a note Thursday.
....

Now, however, "The ECB wants a proper capitalization program and/or restructuring that requires realization of losses and equity capital infusion. The new rule limiting guaranteed bonds as collateral effectively blocks one path that countries have sought to avoid those hard decisions."

This is... particularly bad news for Italian and Spanish banks [of course]...

Relevant:

ECB moves to kill zombie bank financing(!!)