Banks ease credit terms

The ECB said eurozone banks have loosened credit standards for loans to consumers for the first time since the end of 2007, in a sign that the debt crisis may be abating.

A measure of consumer credit standards climbed to a net easing last quarter from a net tightening in the three months ended March, the ECB said in its quarterly Bank Lending Survey yesterday. Banks tightened credit standards less for home loans and at the same rate for firms as the previous quarter.

“The development of credit standards for both non-financial corporations and households in the second quarter of 2013 reflected somewhat reduced contributions not only from banks’ risk perceptions, but also from their cost of funds and balance sheet constraints,” the ECB said in the report.

Banks expect to tighten credit standards less for company and house-purchase loans this quarter and see conditions for consumer loans remaining broadly unchanged.

Lenders’ access to finance improved in all funding categories in the three months through June as the impact of the sovereign debt crisis abated “marginally”, according to the survey. At the same time, banks tightened some lending in response to new regulations and capital requirements.

The decline in demand for company loans slowed moderately in the second quarter and decelerated substantially for housing loans, the ECB said. Banks expect loan demand to drop further in the current quarter, it said.

The ECB survey, involving 132 banks was carried out from Jun 19 to Jul 4.

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