Berlin (Reuters) – In the midst of the corona pandemic, loans in the euro area are flowing abundantly and will probably be in even greater demand towards the end of the year.
In September, the banks in the currency area granted 7.1 percent more loans to companies than a year earlier, as the European Central Bank (ECB) announced on Tuesday. In August there was an increase of the same amount. As the ECB’s survey on lending business (BLS) among 143 banks also shows, loans were no longer as popular in the summer as they were in the spring, when the pandemic hit the economy with full force. However, due to the increasing demand from medium-sized companies in the wake of the second wave of pandemics, they are likely to be requested again in autumn.
According to the chief economist of the state development bank KfW, Fritzi Köhler-Geib, such a development is also foreseeable for Germany: “In the meantime, the economic damage caused by the pandemic in this country is growing daily.” In the particularly affected service sectors such as the hospitality industry, the financial bottlenecks and thus the need for credit are likely to increase again: “The ECB, like the governments, is now called upon to gain the confidence of companies and consumers in this difficult situation by extending and supplementing the crisis measures strengthen.”
According to experts, the European Central Bank (ECB) will probably open the door for further monetary easing steps at its interest rate meeting on Thursday because of the force of the second wave of corona infections. According to experts, the focus should be on the billion dollar bond purchase program PEPP – for many the ECB’s sharpest sword in the fight against the consequences of the pandemic. Many economists expect the central bank to significantly increase the program in December.
WORRY ABOUT ECONOMIC RECOVERY
According to the ECB survey, companies will have to be prepared for the banks to tighten their award standards towards the end of the year. Behind this are concerns about the economic recovery, especially since some industries are still considered vulnerable. According to the Bundesbank, the 34 German banks surveyed as part of the BLS survey tightened their procurement guidelines again in the third quarter – but not as clearly as in the spring. The revival in demand for corporate loans through the corona aid programs of KfW and the federal states’ promotional banks also eased somewhat in the summer.
House loans, on the other hand, were in greater demand again. However, the banks met the increased demand for corporate and residential construction loans with a comparatively high rejection rate: “Above all, companies from sectors particularly affected by the crisis as well as new customers had poor access to credit,” the Bundesbank said.
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