Euro zone banks tighten access to credit on pandemic worries

Euro zone banks tighten access to credit on pandemic worries

© Reuters. FILE PHOTO: ECB headquarters in Frankfurt

FRANKFURT (Reuters) – Euro zone banks tightened access to credit in the third quarter of the year and expected to continue doing so in the remainder of the year as they grew more worried about the impact of the coronavirus pandemic, a European Central Bank survey showed on Tuesday.

Banks tightened their criteria for approving loans to enterprises and consumers as well as the terms and conditions on the credit they did approve, the survey showed. They expected further tightening in the fourth quarter.

They cited an increased perception of risk and lower tolerance for it. This had been partly offset by public-sector support measures in the spring, such as government guarantees on loans.

“For the fourth quarter of 2020, banks expect credit standards to continue to tighten for firms, reflecting concerns around the economic recovery as some sectors remain vulnerable, as well as uncertainties around the prolongation of fiscal support measures,” the ECB said in a statement.

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