| Click for the Finfacts Ireland Portal Homepage |

Finfacts Business News Centre

 Irish Economy
 EU Economy
 US Economy
 UK Economy
 Global Economy
 Asia Economy


How to use our RSS feed

Web Finfacts

See Search Box lower down this column for searches of Finfacts news pages. Where there may be the odd special character missing from an older page, it's a problem that developed when Interactive Tools upgraded to a new content management system.


Finfacts is Ireland's leading business information site and you are in its business news section.


Finfacts Homepage

Irish Share Prices

Euribor Daily Rates

Irish Economy

Global Income Per Capita

Global Cost of Living

Irish Tax - Income/Corporate

Global News

Bloomberg News

CNN Money

Cnet Tech News


Irish Independent

Irish Times

Irish Examiner

New York Times

Financial Times

Technology News




Content Management by interactivetools.com.

News : EU Economy Last Updated: Jan 27, 2011 - 3:40 PM

Eurozone companies increased credit demands from banks in Q4 of 2010; Demand for house loans also increased but fell in Ireland
By Finfacts Team
Jan 27, 2011 - 3:35 PM

Email this article
 Printer friendly page
Chart 1. Changes in credit standards applied to the approval of loans or credit lines to enterprises (net percentage of banks contributing to tightening standards): Notes: "Realised" values refer to changes that have occurred, while "expected" values are changes anticipated by banks. Net percentages are defined as the difference between the sum of the percentages of banks responding "tightened considerably" and "tightened somewhat" and the sum of the percentages of banks responding "eased somewhat" and "eased considerably". The net percentages for responses to questions related to the factors are defined as the difference between the percentage of banks reporting that the given factor contributed to a tightening and the percentage reporting that it contributed to an easing.

Eurozone companies increased credit demands from banks in the final quarter (Q4) of 2010, the European Central Bank said today. Net demand for loans for house purchase also increased but fell in Ireland.

Demand for corporate loans grew from both small and medium-sized enterprises, and from large companies, the ECB said in its quarterly Bank Lending Survey of 120 Eurozone lending institutions.

The banks were reported to have left credit standards unchanged in the fourth quarter of 2010, the survey found.

The survey says credit standards on loans to small and medium-sized enterprises (SMEs) were tightened further, albeit only slightly, while those on loans to larger firms remained stable. Moreover, slightly looser credit standards applied predominantly to short-term loans, while credit standards on long-term loans remained unchanged.

Meanwhile, the credit standards applied to households tended to tighten further. Credit standards on loans for house purchase appear to be tied closely to country-specific developments in housing markets. In the last quarter of the 2010, the net percentage of banks reporting a further tightening of standards for this category of loans bounced back to 11%, mainly driven by increased risk perceptions. This translated into an increase in, above all, margins on riskier loans. The net percentage of banks reporting a tightening of  credit standards on loans to households for consumption purposes also rose slightly (standing at 2%) on account of a more cautious assessment of individual borrowers’ risk profiles.

Looking forward, Eurozone banks expect a very slight further tightening, in net terms, of credit standards for all categories of loans in the first quarter of 2011.

In the last quarter of 2010, Eurozone banks reported that, in net terms, demand for corporate loans and households’ demand for mortgage loans continued to increase, while demand for consumer credit contracted, albeit at a slower pace than in the previous survey round.

In net terms, demand for corporate loans increased in the case of both SMEs and larger firms, and across all types of maturities (albeit more dynamically for long-term loans). In the last quarter of 2010, net corporate demand for loans increased to 10%, compared with 7% in the previous survey. The survey found for the first time in more than two years, financing needs for fixed investment purposes stopped dragging down demand for corporate loans. In addition, Eurozone banks also noted some pick-up in merger and acquisition (M&A) activities. At the same time, and in line with the impact of recent debt restructuring forces in the corporate sector, the increase in demand for loans was partly mitigated by the availability of internal funds.

Net demand for loans for house purchase was reported to have increased noticeably. In the last quarter of 2010, 23% of all the banks - - expressed in net terms - - reported an increase in demand, compared with 10% in the previous survey round. This increase in demand was largely supported by a positive contribution of housing market prospects and a significantly less negative contribution of consumers’ confidence.

In the same period, net demand for consumer credit remained in negative territory, but drew closer to positive values (standing at -2%, compared with -6% in the third quarter of 2010).

Looking forward, in the first quarter of 2011, Eurozone banks expect positive developments to continue in net demand across all types of loans.

The Irish Central Bank said the lending situation for Irish banks was little change from its last survey in October, with banks saying it was more difficult to secure access to funds on international markets. The survey said banks expected this situation to deteriorate further in the first three months of this year.

It showed that demand for loans from business was little changed while demand from households for mortgage loans fell. Demand for other types of consumer lending was unchanged.

© Copyright 2010 by Finfacts.com

Top of Page

EU Economy
Latest Headlines
Spain's strong recovery to slow in the next few years
Italy's Mezzogiorno is Achilles' heel of Euro Area - lowest birth rate since 1862
Euro Area GDP grows at weak 0.3% in Q2 2015
German GDP up 0.4% in Q2 2015; France's GDP stagnates
Germany's Surplus: Lots of critics; Credible solutions scarce
Euro Area industrial production dips in June and May after a flat April
Greece faces two years of recession according to EU officials
High EU youth unemployment rate not as bad as it seems
Eurozone retail PMI surges to highest since January 2011
ECB monetary policy still tight for Southern Europe
German exports fell in June — surplus at record; Exports up 13.7% year-on-year
Eurozone manufacturing sector continued to expand in July
Weak euro unlikely to have significant impact on Euro Area growth
Is Euro Area Ireland's top trading partner?: EU28 is overwhelmingly UK's
German car firms boost exports from Spain, UK, Portugal, Czech Republic, Slovakia, Hungary and Romania
Flash Eurozone manufacturing/ services PMI close to four-year high despite Greek crisis
Krugman calls euro a Roach Motel; Hotel California gets 1-star grade
Greece & Euro Crisis: July 2015 articles from Finfacts
Greece and other poor countries in Euro Area will not become rich
Euro Area manufacturing/ services PMI hits four-year high in June
Western European car market: Recovery continues
Greece could become a failed state like Venezuela
Multinational companies pay on average 30% less tax than domestic competitors in EU
EU's list of 30 tax havens omits the biggest 4 in Europe
China to invest in Juncker's European investment fund
Greek talks collapse; Game theorists gambling with future — Germany's vice-chancellor
German exports and industrial production in strong rises in April
Tackling Inequality: Scandinavian countries have the most successful welfare systems in Europe
Eurozone unemployment fell by 130,000 in April 2015 — down 849,000 in 12 months
Eurozone service sector business activity slowed during May
German 2015 GDP forecast cut; Jobless level at 24-year low
Eurozone manufacturing in modest acceleration in May
FDI into Europe at record in 2014; UK on top: Germany location for future investment
Eurozone economy loses growth momentum; Jobs growth rises
Athens leak suggests Juncker has plan for Greece
Draghi will not end QE early but warns of risks
Eurozone grows faster than US and UK in Q1 2015
German GDP at slower pace, France faster in Q1 2015
Germany may cut income tax; Germans still shun risky investments
Germany had record exports and imports in March 2015