BCN-07 Euro business loans up as firms seek cash to weather virus

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ZCZC

BCN-07

ECB-EU-EUROZONE-BANKING-ECONOMY

Euro business loans up as firms seek cash to weather virus

FRANKFURT AM MAIN, May 29, 2020 (BSS/AFP) – Growth in lending to eurozone
businesses continued to accelerate in April as companies sought funds to cope
with the tough coronavirus lockdowns which hit activity, European Central Bank
data showed Friday.

Loans to non-financial firms added 6.6 percent year-on-year in April after
5.5 percent in March, the ECB said in figures adjusted for some purely
financial transactions.

The pace had been just 3.0 percent in February as the virus began to be
picked up on in Europe.

The central bank said in a quarterly survey of banks that firms’ demand for
credit had “surged” as the pandemic lockdowns hit, being used to cover
“emergency liquidity needs”.

Since March, many eurozone governments have announced massive loan
guarantee programmes, aiming to make sure companies could bridge gaps in
revenue with borrowed cash.

Meanwhile the ECB has expanded its programmes of cheap lending to banks,
offering those financial firms that pass more liquidity on to the real economy
favourable interest rates extending into negative territory — meaning the
banks are effectively paid to borrow.

The data also reflected the predictions from the April survey, as growth in
lending to households continued to slow.

The increase in lending to consumers fell to 3.0 percent last month after
readings of 3.4 percent in March and 3.7 in February.

Across the whole private sector, adjusted loans grew slightly slower in
April than in March, at 4.9 percent.

BSS/AFP/MMA/1605HRS