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- Euro zone banks to tighten access to credit in Q2 - ECB
Euro zone banks to tighten access to credit in Q2 - ECB
Reuters reports that a European Central Bank lending survey showed that euro zone banks expect to tighten access to credit further in the second quarter, as the bloc's pandemic-induced recession drags on and now threatens to disrupt the coming holiday season.
Credit standards, or loan approval criteria, already tightened for firms in the first quarter and lenders see further stiffening ahead, combined with possible bounce in demand.
"This reflects banks' uncertainty regarding the severity of the economic impact of the third wave of the pandemic and the progress in the vaccination campaign," the ECB said a quarterly lending survey.
It added that loan demand was also waning as firms were postponing investments while many were living off either liquidity buffers or direct government liquidity support.
Still, business loan demand could rebound in the second quarter, especially among small and medium sized firms as tighter containment measures raise cash needs.
For housing loans, credit standards eased slightly in the first quarter but banks expect to more than reverse this during the second quarter, even as net demand for mortgages rises, the survey showed.
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