The results of the current Bank Lending Survey show, for Germany, that, in the first quarter of 2010, the surveyed institutions tightened their credit standards to varying degrees depending on the line of business.

In the case of loans to enterprises, the banks participating in the survey left their credit standards largely unchanged on balance. The institutions reported a slight tightening only for long-term loans. Sector-specific and firm-specific factors continued to generate more restrictive tendencies, however, as did the general outlook for the economy, albeit to a somewhat lesser extent. Furthermore, the margins for both risk categories were expanded noticeably by the German banks taking part in the BLS. By contrast, there was a continuation of the trend towards an easing of collateral requirements. For the first time since 2008, the surveyed bank managers reported a slight decline in demand for loans for enterprises due, among other things, to alternative financing via the capital market.

In credit business with households, standards for loans for house purchase were tightened slightly and standards for consumer credit were tightened significantly. Much as in the previous quarter, the margins for average loans for house purchase were tightened slightly. By contrast, riskier loans for house purchase and consumer credit in both credit rating categories were again affected by expanded margins. At the same time, the surveyed banks were faced with a sharp fall in households’ funding requirements.

For the second quarter of 2010, the survey participants expect no further adjustments to their standards for lending to enterprises and private residential construction but somewhat tighter standards for lending for consumption purposes.

The April survey round again contained additional questions on the impact of the financial crisis on the wholesale funding, capital costs and lending behaviour of the participating banks. The surveyed responses showed a marked improvement in the opportunities for refinancing in the money and capital markets in the past quarter. As before, however, just under half of the responding institutions observed higher capital costs in the wake of the financial crisis, which also impacted on lending in some areas.