Banks not lending as they prepare for stress tests, claims Draghi

One of the reasons that Irish and European banks are still not lending is that they are scrambling to clean up their balance sheets as part of the Europe-wide bank stress tests.

ECB president Mario Draghi said that, in the short-term, banks might be unwilling to lend as they try and boost their capital requirements in advance of the asset quality review

“Generally speaking, one certainly might have some short-term deleveraging by the banking system as they prepare for the review,” he said.