Eurozone companies say credit is harder to come by
21-09-2009
FRANKFURT (AFP) - Getting credit has got harder for small- and medium-sized eurozone enterprises (SMEs), a European Central Bank survey showed on Monday, threatening to thwart an already fragile economic recovery.
The ECB's first survey on SME access to finance will feed debate on bank reserve requirements at the Group of 20 summit this week in Pittsburgh and on whether commercial banks helped by state aid have supported economic activity in turn.
The central bank's first study of more than 6,000 eurozone SMEs and larger firms found that a net 33 percent reported a deterioration in access to credit in the first half of 2009.
That meant more companies reported restricted access to credit than those who felt conditions had become easier.
Most companies said a worsening business outlook was the main reason credit was harder to find and that tighter conditions mostly took the form of higher commissions, fees or other costs along with higher collateral requirements.
Only a net five percent of those surveyed actually reported higher interest rates on loans, however.
G20 leaders meeting in Pittsburgh are to discuss whether banks should have to hold a greater percentage of their funds in reserve to protect against the kind of crisis that has rocked the global financial sector for almost two years.
That would mean less money could be lent to businesses and households, however, and undermine what might be a bumpy recovery from the worst global downturn since the Great Depression.
In the coming six months, a majority of eurozone companies "expected their ability to obtain financing to remain broadly unchanged," the ECB said.
It plans to repeat the survey every six months and carry out a more comprehensive survey with the European Commission every two years.
A total of 77 percent of applications for bank credit were ultimately successful, either fully or in part, the ECB said.
"The bigger and older the firm applying for a bank loan, the more likely it was that the loan (or the trade credit or other forms of external financing) would be granted," it added.
The German economy ministry recently unveiled a plan worth 17.5 billion euros to fight credit crunch problems in Europe's largest economy by lending directly to banks and bolstering insurers.
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