EUROPEAN BANKS borrowed over €4bn in overnight deposits from the European Central Bank last night – the highest takeup of the ECB’s overnight deposit facility in three months.

The Wall Street Journal said the ECB lent out €4,058 million to banks for Wednesday night, compared to just €2m in lending on Monday night.

On Tuesday night, Dow Jones newswires added, banks had borrowed €147m.

The overnight lending amount is the highest since May 10, when banks took €4,564 million of European deposits overnight.

Deposits left by banks with the ECB, meanwhile, fell to €39,561 million – down from €145,217 million on Monday, the highest level so far this year, and €62,510 million on Tuesday night.

Reuters quoted one European trader who said the surge was probably caused due to a calendar overlap which required banks to repay one-week and one-month loans yesterday, while new six-month loans were only being made available from today.

“It is likely that people have gone to the overnight window to tide them over,” the trader said.

The spike in borrowing could also have been caused by fears over the future of the French banking sector – in particular Société Générale – which was briefly reported to be seeking emergency talks with President Nicolas Sarkozy.