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Activity in unsecured money market picked up in second quarter ecb survey

FRANKFURT Euro zone banks grew more confident in the second quarter about borrowing and lending to each other in the unsecured money market, which was shunned during the crisis, a survey by the European Central Bank showed on Friday. The ECB's Euro Money Market survey showed that cash borrowing of participating banks in the unsecured market increased by 54 percent to 2.56 trillion euros in the second quarter compared with the same period last year. Their lending increased by 24 percent to 2.02 trillion euros.

"The improvement is especially noticeable in the unsecured markets. Activity in secured markets, the largest money market segment, has increased as well," the ECB said in a statement. Since the financial crisis started, banks have trusted each other less and moved towards requiring collateral in order to lend to each other. This dynamic seems to change now.

The results of this year's survey were derived from a constant panel of 101 banks.

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Brazils caixa econômica to start investment bank unit report

* Plans trade, farm financing in expansion drive* Caixa seeks fresh capital from Brazil Treasury* Spokeswoman at Caixa not available for commentSAO PAULO, Aug 30 Caixa Econômica Federal, Brazil's largest mortgage lender, will start an investment banking unit in a move to expand into the lucrative business of extending credit to corporations and advising them on capital markets transactions, Valor Econômico newspaper reported on Thursday.

Apart from the creation of an investment bank, Brasilia-based Caixa will expand into farming and trade financing, with the start of disbursements expected in October, Chief Executive Jorge Hereda told Valor in an interview.

According to Valor, banks that enter corporate lending segments more aggressively will enjoy a "competitive advantage" over rivals, now that interest rates in Brazil are a record low. "This is a strategic move that is responsibly daring, and not the by-product of recklessness," he told Valor. Currently Caixa and the National Treasury, which owns a majority of the bank, are negotiating terms of a potential capital injection worth "several billions of reais," Valor said.

A spokeswoman for Caixa was not immediately available to comment on the Valor story. Caixa's move signals that foreign and local banks are heavily betting on investment banking as a source of future earnings, even as Brazil's economy takes longer than expected to emerge from a downturn and competition for mergers and acquisitions and capital markets advisory deals spark a slump in fees.