Frontpage News 2014 Easier to get loan...

Easier to get loans in Europe

30 July 2014

​For the first time since the financial crisis, credit conditions for loans to businesses have been adjusted in the euro area. This is what new figures from the European Central Bank (ECB) show. At the same time, the central bank records an increase in corporate loan demand.

Today, the ECB announced the European counterpart to Denmark’s Central Bank’s Danish lending survey for the second quarter. The data suggests that credit conditions in recent times have been adjusted in the euro area.

Thus, the European study suits the results of the recent lending survey from Denmark’s Central Bank, which also signals a modification of the banks’ lending conditions in the second quarter of 2014. The modification comes after years of tightening of the credit policy during the financial crisis.
 
"The recent easing in the credit policy is encouraging news for both European and Danish companies. The way to bank loans has become easier, and the figures in the lending survey suggest that it is applicable to both large and small businesses," said Chief Economist at the Danish Bankers Association, Niels Storm Stenbæk, and continues:
 
"Just as we saw in the Danish survey, it is particularly the competitive situation about the good business customers, which has helped modify the standards of European banks. But also the expectations to the economies have improved."
 
Figure 1. The development of credit standards in Denmark and the euro area
Note: Zero indicates the dividing line between easing and tightening. The figures are based on two different lending surveys conducted respectively by Denmark’s Central Bank and the ECB. The studies are not based on identical assumptions and should therefore be interpreted with caution. The figures for the ECB are inverted, so that negative values correspond to tightening like in Denmark’s Central Bank’s study.
Source: Denmark’s Central Bank, the ECB and the Danish Bankers Association’s calculations.

 

 

The companies' willingness to borrow rises

According to the ECB, corporate demand for loans has increased in the second quarter of 2014. The increase is present both in the euro area and in Denmark. Niels Storm Stenbæk expects this trend to continue in the coming quarters.
 
"The corporate sector’s willingness to borrow and invest is in progress, which in itself is positive for the growth in credit institutions' corporate lending, which, since the crisis began, has been in decline in Europe. In addition, recent developments offer hope to an improved situation on the real economies of the European countries," concludes Niels Storm Stenbæk.
 
Figure 2: The development of corporate loan demand in Denmark and the euro area.
Note: The figures are based on two different lending surveys conducted respectively by Denmark’s Central Bank and the ECB. The studies are not based on identical assumptions and should therefore be interpreted with caution.
Source: Denmark’s Central Bank, the ECB and the Danish Bankers Association’s calculations.
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