Euro zone banks expect to tighten access to credit in Q3: ECB

15 July, 2020 12:00 AM printer

FRANKFURT: Euro zone banks maintained relatively easy access to credit for firms in the second quarter with the backing of government guarantees, but they will likely tighten credit standards in the following three months, the European Central Bank said on Tuesday.

With a pandemic-induced crisis shutting much of the euro zone economy, firms rushed to tap bank credit to stay liquid and government guarantee schemes provided vital support for banks to keep cash flowing, report agencies.

“In the third quarter of 2020, banks expect a considerable net tightening of credit standards on loans to enterprises, which is reported to be related to the expected end of state guarantee schemes in some large euro area countries,” the ECB said in a lending survey.