Banks expect loan demand to surge

FRANKFURT:

Euro zone banks expect corporate loan demand to surge in the third quarter and see just a moderate tightening of credit standards or loan approval criteria, the European Central Bank said on Tuesday. Credit standards held steady in the second quarter after significant tightening last year, the ECB said based on a survey of the bloc’s biggest lenders. On the demand side, the figures suggest that firms are now more willing to invest. “For the first time since the third quarter of 2019, firms’ financing needs for fixed investment contributed positively to loan demand, suggesting that firms may become less reluctant to invest,” the ECB said. Lending surveys are normally a key consideration in ECB policy decisions but Thursday’s meeting will likely focus on tailouring the bank’s stimulus effort to better fit its new strategy, which is likely to trump any real time data.

Published in The Express Tribune, July 21^st, 2021.

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