2020.04.2810:56:00UTC+00Eurozone Banks To Ease Lending Conditions For Firms

Eurozone banks are set to ease lending terms for firms on account of the support measures introduced by governments, the Bank Lending Survey from the European Central Bank showed on Tuesday.

The survey revealed high uncertainty surrounding the likely impact of the coronavirus, or covid-19, pandemic and the different views of banks on the impact on lending conditions.

Tightening of credit standards on loans to households are set to continue in the second quarter.

In the first quarter, banks had tightened lending terms for both firms and households citing deterioration of the general economic outlook, increased credit risk of borrowers and lower risk tolerance.

The survey showed that demand for loans from firms surged in the first quarter due to the emergency liquidity needs in the context of the coronavirus pandemic. At the same time, demand for housing loans declined and demand for consumer credit turned negative.

Financial institutions expect that net demand for loans to firms will increase further in the second quarter. A strongly negative net balance for demand for housing loans and consumer credit is expected by banks in the second quarter of 2020.