Featured Product

    ECB Releases Results of July 2020 Lending Survey of Banks in Euro Area

    July 14, 2020

    ECB published results of the lending survey conducted on 144 banks in the euro area between June 5 and 23, 2020. The survey is conducted four times a year and is intended to improve an understanding of lending behavior of banks in the euro area. The results of the July 2020 survey relate to changes observed during the second quarter of 2020 and expectations for the third quarter of 2020. The survey results show a continued upward impact of the COVID-19 pandemic on firms’ loan demand, largely driven by emergency liquidity needs. Banks also reported broadly unchanged credit standards on loans or credit lines to firms in the second quarter of 2020.

    According to banks, fiscal and monetary policy measures played a significant role in maintaining favorable credit standards for loans to firms. Banks expect credit standards for enterprises to tighten considerably in the third quarter, which is reported to be related to the expected end of state guarantee schemes for loans in some large euro area countries. Firms’ demand for loans or drawing of credit lines surged further in the second quarter of 2020. The increased demand for working capital connected to emergency liquidity needs and possibly precautionary build-up of liquidity buffers more than offset the negative contribution of demand for fixed investment. Banks expect the net increase in firms’ demand for loans to be lower in the third quarter. In addition to results for the entire euro area, the report also presents results for the four largest euro area countries—Germany, France, Italy, and Spain. Credit standards on loans to enterprises tightened in Germany in the second quarter of 2020, while an easing was observed in Spain, Italy, and France. Banks in Spain, Italy, and France reported that government loan guarantees played a significant role in maintaining favorable credit standards for loans to firms, while banks in Germany mentioned that firms’ demand for loans guaranteed by governments was overall lower than expected. 

    Against the COVID-19 backdrop, credit standards for housing loans and consumer credit tightened considerably in the second quarter, related mostly to the deterioration of the economic outlook and worsened borrowers’ creditworthiness. Net demand for housing loans and consumer credit decreased considerably in the second quarter, on account of precautionary savings and low spending possibilities during the strict lockdown period, coupled with uncertainties in the employment situation. For housing loans and consumer credit, credit standards tightened in Germany, France, and Spain, but remained unchanged in Italy. Banks expect a continued net tightening of credit standards and a rebound in household loan demand in the third quarter of 2020. Regarding the impact of non-performing loan (NPL) ratios, banks reported a net tightening impact of NPL ratios on their credit standards and on terms and conditions for loans across all loan categories in the first half of 2020. Over the next six months, they expect an increased net tightening impact for loans to enterprises, housing loans, and consumer credit. Risk perceptions and risk aversion were the main drivers of the tightening impact of NPL ratios.

     

    Related Links

    Keywords: Europe, EU, Banking, COVID-19, Bank Lending Survey, Loan Guarantee, Credit Risk, NPLs, Basel, ECB

    Featured Experts
    Related Articles
    News

    EBA Launches Stress Tests for Banks, Issues Other Updates

    The European Banking Authority (EBA) launched the 2023 European Union (EU)-wide stress test, published annual reports on minimum requirement for own funds and eligible liabilities (MREL) and high earners with data as of December 2021.

    January 31, 2023 WebPage Regulatory News
    News

    EBA Proposes Standards for IRRBB Reporting Under Basel Framework

    The European Banking Authority (EBA) proposed implementing technical standards on the interest rate risk in the banking book (IRRBB) reporting requirements, with the comment period ending on May 02, 2023.

    January 31, 2023 WebPage Regulatory News
    News

    FED Issues Further Details on Pilot Climate Scenario Analysis Exercise

    The U.S. Federal Reserve Board (FED) set out details of the pilot climate scenario analysis exercise to be conducted among the six largest U.S. bank holding companies.

    January 17, 2023 WebPage Regulatory News
    News

    US Agencies Issue Several Regulatory and Reporting Updates

    The Board of Governors of the Federal Reserve System (FED) adopted the final rule on Adjustable Interest Rate (LIBOR) Act.

    January 04, 2023 WebPage Regulatory News
    News

    ECB Issues Multiple Reports and Regulatory Updates for Banks

    The European Central Bank (ECB) published an updated list of supervised entities, a report on the supervision of less significant institutions (LSIs), a statement on macro-prudential policy.

    January 01, 2023 WebPage Regulatory News
    News

    HKMA Keeps List of D-SIBs Unchanged, Makes Other Announcements

    The Hong Kong Monetary Authority (HKMA) published a circular on the prudential treatment of crypto-asset exposures, an update on the status of transition to new interest rate benchmarks.

    December 30, 2022 WebPage Regulatory News
    News

    EU Issues FAQs on Taxonomy Regulation, Rules Under CRD, FICOD and SFDR

    The European Commission (EC) adopted the standards addressing supervisory reporting of risk concentrations and intra-group transactions, benchmarking of internal approaches, and authorization of credit institutions.

    December 29, 2022 WebPage Regulatory News
    News

    CBIRC Revises Measures on Corporate Governance Supervision

    The China Banking and Insurance Regulatory Commission (CBIRC) issued rules to manage the risk of off-balance sheet business of commercial banks and rules on corporate governance of financial institutions.

    December 29, 2022 WebPage Regulatory News
    News

    HKMA Publications Address Sustainability Issues in Financial Sector

    The Hong Kong Monetary Authority (HKMA) made announcements to address sustainability issues in the financial sector.

    December 23, 2022 WebPage Regulatory News
    News

    EBA Updates Address Basel and NPL Requirements for Banks

    The European Banking Authority (EBA) published regulatory standards on identification of a group of connected clients (GCC) as well as updated the lists of identified financial conglomerates.

    December 22, 2022 WebPage Regulatory News
    RESULTS 1 - 10 OF 8700