Tags: european | central | bank

ECB: Loan Demand Rising, Finally

By    |   Thursday, 06 Aug 2009 03:34 PM

The European Central Bank says that loan demand is rising, which indicates the credit crisis may be over.

Consumers’ demand for home loans has turned positive in the eurozone for the first time in more than three years, according to a new ECB report cited by the Financial Times.

And companies see banks loosening their lending spigot a bit, the ECB’s latest bank lending survey shows. Banks raised their credit requirements for companies at a much slower pace in the second quarter than in the previous three quarters, the ECB says.

The developments concerning corporate loans “confirm a turning point in the tightening cycle,” the ECB said. To be sure, the stricter standards banks imposed last year still constitute a “significant degree of net tightening.”

That has led the ECB to take action itself. In June the central bank injected $620 billion into the banking system in the form of one-year loans, and it continues to urge banks to lend at moderate interest rates.

Gilles Moec, a Deutsche Bank economist, tells the FT that demand for corporate credit will rise later this year and “how banks adjust their credit standards at that point will be crucial.”

In Britain, the government faces a dilemma, Irfan Younus, an analyst at NCB Stockbrokers, tells The Wall Street Journal.

"It wants to make sure the banks do lend, but at the same time also wants to protect its investments by keeping the banks profitable," Younus says.

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The European Central Bank says that loan demand is rising, which indicates the credit crisis may be over.Consumers’ demand for home loans has turned positive in the eurozone for the first time in more than three years, according to a new ECB report cited by the Financial...
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2009-34-06
Thursday, 06 Aug 2009 03:34 PM
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