EUROPEAN banks are making it harder for businesses to get access to credit even as demand drops, according to a new report.
The European Central Bank’s latest quarterly Bank Lending Survey showed the banks are seeing lower demand and tighter credit standards for both business and personal loans.
The report covering the three months to the end of September showed lending standards were some 5pc tougher than the previous survey.
Despite the fact that the banks were making it tougher to lend, lenders themselves said it was a little easier to raise funds on the wholesale markets.
“The impact of banks’ cost of funds and balance sheet constraints on the net tightening of credit standards eased in the case of loans to both enterprises and households,” the report said.
“By contrast, risk perceptions contributed to the increase in the net tightening of credit standards on loans to enterprises in the third quarter of 2012, while in the case of loans to households for house purchase the impact of the general economic outlook and housing market prospects remained broadly unchanged,” the ECB added.
Overall the bank said it had seen a "pronounced net decline" in business demand for credit in the third quarter, mainly due to large inventories and merger activity.