LISBON (MNI) – Portugal’s banks, particularly hard hit by the
Eurozone debt crisis and an austerity plan initiated earlier this year,
expect to continue tightening their lending standards in the third
quarter for both business and households, the Bank of Portugal reported
Thursday.
In a report on its national bank lending survey, which was
encompassed in the ECB’s Eurozone-wide survey released earlier today,
the Bank of Portugal said that conditions on corporate and household
lending had already tightened in the second quarter.
“In a period that was particularly turbulent for Portugal —
dominated by the request for financial assistance and a subsequent deal
with the European Union, the euro area member countries and the
International Monetary Fund, — the increased restrictiveness on lending
policies was related in large measure to an increase in the cost of
capital and balance sheet restrictions, as well as to a less favorable
evaluation of perceived risks by [financial] institutions, as reflected
in a deterioration of the outlook for economic activity in general,” the
central bank said.
The bank said that business demand for loans declined slightly in
the second quarter. Underlying the decline, it said, was a reduction in
financing needs related to investment, mergers and acquisitions and
business restructuring.
Loan demand from households also declined, particularly for
mortgage lending, the Bank of Portugal said. It attributed the drop
largely to sagging consumer confidence.
For the third quarter, four of five banks surveyed said they “do
not anticipate significant changes” in loan demand from businesses,
while one bank expected a slight decline. All banks surveyed said they
expected household loan demand to drop in the third quarter, both for
home buying and for consumer purchases.
–Paris newsroom, +331-42-71-55-40; bwolfson@marketnews.com
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