ECB Releases Results of Bank Lending Survey for Fourth Quarter of 2020
ECB published results of the quarterly lending survey conducted on 143 banks in the euro area. The results reported in the survey relate to changes observed in the fourth quarter of 2020 and expected changes in the first quarter of 2021, unless otherwise indicated. The loan categories include loans to enterprises, loans to households for house purchase, and consumer credit and other lending to households. In addition to results for the euro area as a whole, the report also presents results for the four largest euro area countries—namely, Germany, France, Italy, and Spain. Bundesbank has separately published the results of the quarterly lending survey conducted on 34 banks in Germany. The ECB report reveals a net tightening of the credit standards on loans to firms in EU in the fourth quarter of 2020.
The ECB lending survey included a number of ad hoc questions that address the impact of various factors on changes in banks’ lending conditions and demand for loans; these factors include the impact of the situation in financial markets on banks’ access to retail and wholesale funding, the impact of new regulatory and supervisory requirements on banks’ lending policies, the impact of banks’ non-performing loan ratios on their lending policies, and the impact of government loan guarantees related to the COVID-19 pandemic. Euro area banks indicated that regulatory or supervisory actions continued to strengthen banks’ capital position and had a strong easing impact on their funding conditions in 2020. Banks also reported that supervisory or regulatory actions continued to have a net tightening impact on their credit standards across all loan categories. Euro area banks reported that nonperforming loans had a tightening impact on credit standards and on terms and conditions for loans to enterprises and consumer credit in the second half of 2020 (and a broadly neutral impact for housing loans). Risk perceptions and risk aversion were the main drivers of the tightening impact of nonperforming loan ratios.
The survey revealed that the net percentage of banks reporting a tightening of credit standards for loans or credit lines to firms was somewhat higher than in the previous round. Credit standards for loans to households also tightened but at a slower pace than in the previous quarters of 2020. Banks referred to the deterioration of the general economic outlook, increased credit risk of borrowers, and a lower risk tolerance as relevant factors for the tightening of their credit standards for loans to firms and households. Looking at a sectoral breakdown, respondent banks indicated a net tightening of credit standards for loans to enterprises across all main sectors of economic activities in the second half of 2020. The net tightening was most pronounced for loans to firms in the commercial real estate and the wholesale and retail trade sectors. Looking forward, in the first quarter of 2021, banks expect credit standards to continue to tighten for loans to firms and households. Also, in the first quarter of 2021, banks expect net demand for loans to firms, and for consumer credit, to increase and net demand for housing loans to decline.
Related Links
Keywords: Europe, EU, Banking, Bank Lending Survey, COVID-19, Credit Risk, Basel, NPL, Bundesbank, ECB
Featured Experts
María Cañamero
Skilled market researcher; growth strategist; successful go-to-market campaign developer
Victor Calanog, Ph.D.
Leading economist; commercial real estate; performance forecasting, econometric infrastructure; data modeling; credit risk modeling; portfolio assessment; custom commercial real estate analysis; thought leader.
Nicolas Degruson
Works with financial institutions, regulatory experts, business analysts, product managers, and software engineers to drive regulatory solutions across the globe.
Previous Article
RBI Releases List of Domestic Systemically Important BanksRelated Articles
BSP Tackles Aspects of Lending and Islamic, Open & Sustainable Finance
The Central Bank of the Philippines (BSP) issued communications covering developments related to online lending platforms, open finance framework and roadmap, and on the expected regulations in the area sustainable finance.
US Agencies Issue Regulatory Updates, FDIC Launches Tech Sprint
The Board of Governors of the Federal Reserve System (FED) published the final rule that amends Regulation I to reduce the quarterly reporting burden for member banks by automating the application process for adjusting their subscriptions to the Federal Reserve Bank capital stock, except in the context of mergers.
EBA Issues Guide on Bank Resolvability, Consults on Transferability
The European Banking Authority (EBA) published its assessment of risks through the quarterly Risk Dashboard and the results of the Autumn edition of the Risk Assessment Questionnaire (RAQ).
MFSA Publishes CRD5 Updates and Supervisory Priorities for 2022
The Malta Financial Services Authority (MFSA) updated the guidelines on supervisory reporting requirements under the reporting framework 3.0.
HKMA Extends Repayment for Trade Facilities, Consults on Crypto-Assets
The Hong Kong Monetary Authority (HKMA) published a circular, along with the reporting form and instructions, for self-assessment, by authorized institutions, of compliance with the Code of Banking Practice 2021.
FCA Registers Securitization Repositories; PRA Issues 2022 Priorities
The Financial Conduct Authority (FCA) decided to register European DataWarehouse Ltd and SecRep Limited as securitization repositories under the UK Securitization Regulation, with effect from January 17, 2022.
EC Regulation Sets Out Methods for Measuring K-Factors Under IFR
The European Commission (EC) published the Delegated Regulation 2022/25, which supplements the Investment Firms Regulation (IFR or Regulation 2019/2033) with respect to the regulatory technical standards specifying the methods for measuring the K-factors referred to in Article 15 of the IFR.
BIS Studies How Platform Models Impact Financial Stability & Inclusion
The Bank of International Settlements (BIS) published a paper that assesses the ways in which platform-based business models can affect financial inclusion, competition, financial stability and consumer protection.
CBE Issues Additional Measures to Ease Disruptions from Pandemic
The Central Bank of Egypt (CBE) published a circular with instructions on emergency liquidity assistance to banks that are unable to meet their liquidity requirements.
ESAs Publish List of Financial Conglomerates for 2021
The European Supervisory Authorities (ESAs) published the list of identified financial conglomerates for 2021.
