FRANKFURT – Euro zone banks tightened access to credit for businesses in the first quarter of the year and see further tightening in the current quarter due to rising economic risk, the European Central Bank’s lending survey showed on Tuesday.
Banks reported a small tightening of credit standards – their internal guidelines or loan ap-proval criteria – for business loans and see a further net tightening in all three loan seg-ments in the current quarter, the ECB said.
The tightening was driven by higher perceived risks related to the economic out-look and to the industry and firm-specific situations, the ECB said based on its quarterly Lending Sur-vey, a key input into Thursday’s interest rate decision.
Demand for corporate credit decreased last quarter but banks see a small in-crease in the current quarter.
“Loan demand decreased, mainly owing to a negative contribution from firms’ inventories and working capital and despite the support from declining interest rates,” the ECB said.
For mortgages, demand continued to surge and banks see a further increase ahead.
