Regulation / banks

Industrial economy slows down growth of corporate loans in Germany

The economic problems in parts of German industry are increasingly reflected in the banks‘ lending business. As the results of the latest ECB Bank Lending Survey in Germany show, banks tightened their lending conditions for companies in the final quarter of 2019, for example by widening margins. Although the demand for credit from corporate customers continued to rise overall, this was not the case in the first quarter of 2019. However, growth was driven by small and medium-sized enterprises, while demand for loans from large companies actually declined. For the coming months, a clear majority of banks expect demand for loans from corporate customers to shrink. Compared to the October survey, the share of pessimistic banks has even increased, especially with regard to large companies. Even if no further tightening or even loosening of lending guidelines is planned for the time being, the growth of corporate loans on banks‘ books…

Lagarde is in no hurry

The 500th council meeting exactly five years after the announcement of the QE program would have been an exciting event. The fact that there were no new announcements on the ECB’s current monetary policy today was not surprising. On the one hand, the economic picture with decreasing downside risks is developing more or less as expected by the ECB. Accordingly, there was no need to change course. An interesting statement regarding indications as to whether Mrs Lagarde prefers a hawkish or dovish course was the brooch she wore today – an owl! On the other hand, in view of the strategic review of monetary policy that is now under way, the ECB will not necessarily be willing to make adjustments if it does not have to. Why should it, when in a year’s time it may have a different approach. As far as the strategic review of monetary policy is…

Economic slowdown reaches banks‘ lending business in Germany

The economic slowdown in Germany has now also reached the lending business. The extremely dynamic growth of banks‘ customer loans has slowed recently. From the end of September 2018 to the end of September 2019, loans to companies, private households and the state rose by 4.0 percent to EUR 2,928.2 billion. The strongest growth was again recorded in corporate loans. However, the increase slowed compared to the middle of the year. On the other hand, growth in private housing loans remained stable at a high level. The economic environment, which is characterised by a weakening industry, but a persistently good construction sector, is also reflected in the expectations of banks for the coming months. Most of them expect demand for corporate loans to fall and are planning to tighten their credit guidelines for these customers. The banks are more optimistic about the demand for credit from private households, for whom…

Central banks need relief

At the latest since the ECB’s latest loosening package in September, the limits of monetary policy have been the subject of renewed discussion. Because the lower interest rates slide into the red, the more questionable the positive real effects on the economy that the central bank expects them to have. At the same time, the risks to financial stability are increasing, whether due to excessive indebtedness or price exaggerations on the stock, bond or real estate markets. But the financial markets have long since adjusted to the overabundant supply of liquidity. The hunt for returns leads to increasingly risky investments. And an excessive indebtedness does not seem to represent a large risk with a zero or negative interest rate first of all. This makes it all the more difficult for central banks to get out of low interest rates. In order to make their task easier for the central banks,…

World Savings Day 2019: „More than money and interest“.

World Savings Day boomed in Germany in the 1970s and 1980s, when millions of customers and their children went on pilgrimages to the banks every year to empty piggybanks, invest money and enjoy the growth of financial assets. Today, on the other hand, there is more frustration when it comes to saving. It is the continuing low interest rate phase that is to blame. For some time now, the meagre interest income has no longer been sufficient to at least offset inflation. Negative real returns are the order of the day and cause a loss in value of financial assets in the billions. In this environment, many bank customers ask themselves whether saving makes sense at all. In fact, however, there is ample need for regular savings. After all, the demographic change in our society is making the „generation contract“, on which the statutory pension is based, function worse and…

Bank Lending Survey: German banks fear falling demand for corporate loans

ank Lending Survey: German banks fear falling demand for corporate loans The economic slowdown in Germany is noticeably reflected in the results of the ECB’s current bank survey. For the first time in five years, the majority of German banks expect corporate customers‘ demand for credit to decline in the coming months. Large companies in particular are expected to have a lower demand for credit. At the same time, a slight majority of banks are planning to tighten their lending guidelines for corporate customers. The credit providers are thus reacting to the current slowdown in economic growth, which is particularly affecting export-driven companies in the manufacturing sector. As the October survey continues to show, private housing loans, on the other hand, should contribute to stabilizing the credit market. The majority of banks believe that demand for credit will continue to grow, and institutions intend to relax their credit guidelines rather…

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