ECB: Banks set to continue tightening lending criteria

26 July 2012

Banks across Europe will continue tightening up their criteria for lending in the near future as demand from businesses and consumers slows further.

That is according to the latest quarterly Bank Lending Survey published yesterday (25 July) by the European Central Bank (ECB), which has indicated that the eurozone's financial problems look set to carry on for some time yet.

For instance, the ECB revealed that 11 per cent of financiers opted to make it more difficult for firms to borrow cash in the second quarter of 2012, in comparison to just one per cent that loosened their criteria.

"Looking ahead to the third quarter, banks expect a continued decline in the net demand for loans, both for enterprises and households, even if less negative than in the second quarter," the report added.

However, in slightly more positive news for the region, the slump in demand for mortgages slowed down in quarter two, with 21 per cent of banks experiencing a drop against 43 per cent in the opening three-month period of the year.

By Asim Shah

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