Eurozone banks trim lending again

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Eurozone banks trim lending again

Eurozone banks trim lending again
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Eurozone banks are not lending as much.

The number of loans to the private sector contracted further in July.

The amount lent out was 1.9 percent less than the same month last year.

That is a drag on the region’s fragile economic recovery.

It also puts more pressure on the European Central Bank to maintain its stimulus measures, such as low interest rates.

The figures – which were compiled by the ECB – reveal declines were generally steeper in the eurozone’s struggling periphery, adding to evidence that the recovery is uneven.

A recent ECB survey showed eurozone banks tightened their lending standards for both companies and home loans in the second quarter.

New regulations mean the banks are having to increase their capital reserves.

With much of the eurozone periphery still in recession, investment and spending is subdued, while banks are restraining lending to repair their balance sheets – a combination that risks condemning the bloc to an anaemic and uneven recovery.

Banks granted non-financial firms 21 billion euros less in loans in July than in the previous month, data adjusted for sales and securitisations showed, after a fall of 12 billion euros in June.

Those loans fell most in Spain, 10.0 percent from the same month a year earlier. The only countries with growth rates were Finland, Estonia and the Netherlands.