As of today, the banks seem to have found some place to allocate those funds, most likely in sovereign debt.
As I noted previously, prices are going up in those countries less affected by the crisis. In those countries, credit-based assets are going bubbly. In the whole EU, food and basic products are seeing how the money that was supposed to be destined to pay the now-underwater mortgages and other credit-based products acquired over the past ten years is duplicated and redirected to basic products by the chain created by ECB-banks-states. In this case, prices simply go up in creditor nations (Germany, Austria...) whereas they are stable in debtor nations (Spain, Portugal) due to retail and industrial margin reductions.
This will have the effect of wiping out retailers and manufacturers in southern countries, while creating housing bubbles and general inflation in central countries. And this will not end here: both LTRO programs, surpassing 1 trillion EUR, and the risk of the need for another 3.0 version, is a money stream with enough pressure to break the fear-deflationary dam that currently prevents it from flooding the markets and spurring the effect of losing confidence in the currency and its issuer.
As I say: brace yourselves.