"Shares slump on European bank fears"

Wailed the BBC on Tuesday, as, to be fair, did most of the rest of the MSM. The nub of it appears to be this:

The European Central Bank (ECB) will offer funds on Wednesday to banks looking to repay 442bn euros worth of loans later this week. Last summer, the ECB was forced to offer European banks cheap 12-month loans to help them through the financial crisis. This was a longer repayment term than the usual three to six months.

But the ECB has said it will not offer 12-month loans this time around, raising fears that European banks may again face funding difficulties. "Markets are tense going into the end of the long-term refinancing programme, along with [Wednesday's] three-month auction," said John Hydeskov, senior currency analyst at Danske.

Ho hum. Two points to make, really.

1. Did nobody see this coming? None of the stockbrokers or analysts or experts? I accept that it's the banks' job to squeeze every last penny out the government (i.e. the taxpayer, i.e. the productive economy) as they possibly can, so if they'd started moaning three months ago the ECB would have had time to mount a propaganda counter-attack (and/or dust down the handbook on how debt-for-equity swaps work); if they'd started moaning a minute before the repayment deadline, the ECB wouldn't have had all the systems and paperwork in place for playing 'extend and pretend', so fair play to the banks for comedy timing, but there was no secret that the repayment/refinancing deadline is tomorrow.

2. The Euro-zone is pretty big, economically, maybe five times as big as the Sterling-zone. If the Euro-zone is all a-jitter over €442 billion of taxpayer-backed bank bail-outs, WTF would* happen if the UK government asked UK banks to repay the £185 billion loans it made under the Special Liquidity Scheme, and which is due for repayment between April 2011 and April 2012? Not to mention the £125 billion taxpayer-backed Credit Guarantee Scheme, also due to expire in April 2012?

Just askin', is all.

UPDATE: more facts and figures on item 2 on R Peston's blog.

* I use "would" rather than "will" as I consider it unlikely that the Blue-Yellow Wing of the Home-Owner-Ist Party will do anything that might deflate the house price bubble, but hey.