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ECB signals Eurozone banks see further easing of loan standards

FXStreet (Łódź) - The ECB released its quarterly Bank Lending Survey on Wednesday in which it revealed that the Eurozone financial institutions expect further loosening of credit standards in the last quarter of the year, after easing them in the previous quarter.

According to the report, the demand for loans has risen in Q3 and is forecasted to grow further in Q4. Banks plan to use ECB's TLTRO funds to grant additional loans.

"Cross-country disparities in lending supply conditions continued to decline in the third quarter of 2014, again more for loans to households than for loans to enterprises," the ECB pointed out.

In the light of these findings, Martin van Vliet from ING suggests that "the worst of the credit cycle may be behind us."

"However, loan demand remain weak, especially from non-financial corporations, he points out. "With the comprehensive assessment of the European banking sector out of the way, the hope is that banks will become less constrained in extending credit to the private sector and that net lending growth will turn positive before long. However, in our view, this will also require a (much) stronger appetite for loans. With many businesses and households still cautious on spending or keen to deleverage, this won’t materialise overnight."

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