Eurozone banks to tighten access to credit in Q2: ECB survey
FRANKFURT, April 20 (Reuters) – Eurozone banks plan to further tighten access to credit in the second quarter, a European Central Bank lending survey showed on Tuesday, as the pandemic-induced recession continues and now threatens to disrupt the season vacation to come.
Weighted down by more than a year of lockdowns, much of Europe’s services sector is surviving on emergency liquidity and the ECB fears banks will shut off monetary taps, forcing companies to shut down and leaving the economy battered .
Credit standards, or loan approval criteria, were already tightened for businesses in the first quarter and lenders see further tightening ahead, combined with a possible rebound in demand.
“This reflects banks’ uncertainty about the severity of the economic impact of the third wave of the pandemic and the progress of the vaccination campaign,” the ECB said in a quarterly lending survey.
He added that the demand for loans was also declining, as companies postponed their investments as many lived on either liquidity cushions or direct support from government liquidity.
Nonetheless, demand for business loans could rebound in the second quarter, especially among small and medium-sized businesses, as tighter containment measures would increase liquidity needs.
For home loans, lending standards eased slightly in the first quarter, but banks expect more than to reverse this trend in the second quarter, even as net demand for mortgages increases, according to the survey .
The ECB pledged extremely low borrowing costs for years to come and stepped up asset purchases last month, all in the hope that lower wholesale borrowing costs would trickle down to businesses and consumers.
A key contribution to the ECB’s deliberations, the quarterly lending survey comes just two days before the ECB’s April policy meeting, during which the bank will only reaffirm its super-easy policy and may voice concerns. on the strength of the euro and rising yields.
(Report by Balazs Koranyi edited by Francesco Canepa)
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