According to the results of the latest Bank Lending Survey (BLS) for the fourth quarter of 2008, the surveyed institutions again tightened their credit standards considerably in all business areas. However, the extent of the changes in Germany was still less than those made in the euro area as a whole.

Specifically, the German banks taking part in the BLS perceptibly tightened their credit standards for loans to enterprises and, at the same time, widened their margins significantly. These changes affected large enterprises as well as small and medium-sized enterprises and also affected loans of all maturities, with the participants in the survey reporting a largely unchanged demand for credit.

According to the information supplied by the German bank managers interviewed, the tendency was for credit standards to be tightened for loans to households as well. Although the credit standards for loans for house purchase remained basically unchanged, the margins for both average and riskier loans were widened considerably. By contrast, the moderate tightening of conditions for consumer credit was reflected in both the standards and the margins. At the same time, the participating institutions reported that demand for loans for house purchase had decreased somewhat while demand for consumer loans remained basically unchanged.

For the first quarter of 2009, the participants in the BLS expect a further tightening of their credit standards for loans to enterprises and to households.

The January survey again contained additional questions about the effects of the financial market crisis on the lending behaviour of the surveyed banks. Once again, the responses indicate continuing problems in refinancing. These problems were also reflected in the supply conditions. According to the information supplied by the bank managers, the announcement of government measures to stabilise the financial system has had hardly any impact so far on their institutions’ market access to wholesale funding. The constraints arising from capital restrictions increased in the fourth quarter of 2008, and the banks expect the impact on capital and on lending to increase further in the first quarter of 2009 as well.

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