Loans: Stricter criteria for banks in the euro area

Eurozone banks’ lending criteria became stricter in the third quarter of 2020, while corporate demand for loans declined due to their lower liquidity emergencies, according to the Eurosystem Banking Lending Survey. Ie bank internal guidelines or loan approval criteria – have become stricter for all types of loans – business, mortgage, consumer and other loans to households. Banks attributed this development to the deteriorating overall economic outlook, increased borrowers’ credit risk and lower risk tolerance. Banks and lending For the fourth quarter of 2020, banks expect credit standards to continue to for businesses, reflecting concerns about economic recovery as some sectors remain vulnerable as well as uncertainties about extending fiscal support measures. They also expect the same to apply to mortgages to households. The overall terms of bank loans have become stricter for new loans to businesses due to higher interest rates, especially for the riskier loans, and requirements for pawns. The same thing happened with mortgages to households. Companies’ demand for loans or credit lines fell due to their lower liquidity needs due to the coronavirus pandemic after a net increase – record demand in the previous quarter . Banks, as reported by APE, expect that the net demand for business loans will recover in the fourth quarter, as well as the demand for consumer loans, while on the contrary they expect that the demand for mortgages will decrease. In terms of access to funding sources, banks reported an improvement, which was supported by the monetary policy measures of the European Central Bank. These measures have had a positive impact on bank lending terms and the volume of loans. At the same time, bond purchases by the ECB and its negative deposit interest rate are estimated by banks to have a negative impact on their profitability. Follow it on Google News and be the first to know all the news See all the latest News from Greece and the World, at

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