Awards criteria are expected to tighten slightly in the fall quarter.
Frankfurt. Banks in the eurozone expect slightly stricter standards for corporate loans in the autumn quarter. This comes from a survey published on Tuesday by the European Central Bank among 146 financial institutions. At the same time, they emphasized that they assessed the credit risk as generally balanced.
Last summer’s quarter, financial institutions kept their internal corporate lending guidelines largely stable. At the same time, companies requested more loans. A further recovery in the lending business is expected for the current fourth quarter.
Also, 34 banks in Germany participated in the ECB survey. According to a Deutsche Bundesbank report, financial institutions surveyed tightened their guidelines for granting corporate and housing loans slightly in the third quarter. On the other hand, standards for consumer credit and other credit have been marginally relaxed. At the same time, demand for corporate loans continued to rise in Germany in the summer, albeit less than expected. According to Bundesbank, this could indicate that companies have sufficient liquidity – for example from support -: “On the other hand, supply bottlenecks are likely to prevent expansion of production and investment.”
The European Central Bank is using the results of the Bank Lending Survey to shape its currently very loose monetary policy. The stated goal is to ensure a favorable financing environment for the economy during the coronavirus pandemic. The topic is likely to come up again at Thursday’s interest rate meeting.
However, the future of PEPP will not come until mid-December. It should run until the end of March 2022 at least. Many experts assume that the ECB will not completely stop buying bonds after that, but will continue the currently smaller APP purchase program in one form or another.
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