90 days loan in 30 days.
A bank can borrow money for 120 days and lend that amount for 30 days. at the end of 30 days, the bank receives funds from the repayment of the 30 days loan it made and, has use of these funds for the next 90 days at an effective rate determined bye the original transactions. The effective rate of interest on this 90 days loan depends on both 30 days libor and 120 days libor at the time the money is borrowed and loaned to the third party.
I didn't get this point how the effective rate of interest of this 90 days loan would be decided?