According to the results of the latest Bank Lending Survey (BLS) for the first quarter of 2009, the surveyed institutions again tightened their credit standards in all business areas. In contrast to the preceding quarters, when the changes in credit standards in Germany had been less marked than in the euro area as a whole, they were on much the same scale this time.

Specifically, the German banks taking part in the BLS applied more restrictive terms and conditions in granting loans to enterprises. The standards for loans to enterprises were, on balance, tightened across all types of enterprises and for all maturities. There was also a sharp expansion of margins. In this context, the survey participants were faced with a largely stagnating demand for loans.

According to the surveyed German bank managers, loans to households, too, were subject to more stringent standards during the quarter under review. There was a marked tightening of standards for both loans for house purchase and consumer credit. In addition, the margins for average as well as for riskier loans were widened considerably. At the same time, the participating institutions noted a perceptible rise in households’ demand for loans.

For the second quarter of 2009, the BLS respondents expect a further tightening of their credit standards for loans to enterprises and consumer credit.

The April survey again contained additional questions about the effects of the financial market crisis on the lending behaviour of the surveyed banks. According to the information provided by the bank managers, problems in wholesale funding eased somewhat in some markets and had less of an impact on supply conditions than in the three preceding months. The responses to the question on the effects of the announced government measures to stabilise the financial system suggest that these led, on average, to a slight quarter-on-quarter improvement in the surveyed institutions’ market access to wholesale funding. Nevertheless, the problems associated with capital constraints and their negative repercussions for lending persisted in the past quarter.

The aggregated survey results for Germany may be found at http://www.bundesbank.de/volkswirtschaft/vo_veroeffentlichungen.en.php