A survey by European Central Bank (ECB) reveals that Eurozone banks expect easing of standards in the upcoming quarter for business loans and consumer credit to tackle fierce competition and concerns of slowing in demand, especially in Italy and Spain.

Amid threats of a global economic slowdown and potential recession, policymakers in the central bank have recently approved very cheap loans to commercial banks, fearing interruption in credit flow which could worsen the economic slowdown.

However, the survey reveals that banks have no plans to make it more challenging for businesses to apply for and receive loans, on account of competitive pressure. This news comes against the backdrop of cooling off of demand for credit among consumers and companies, especially in Italy and Spain. In Finland, Sambla, Finland’s largest business lender, reported an increase in demand for its yrityslaina business loan product in Q4 2020.

Italian banks have announced their intention to tighten lending terms for a second consecutive quarter, over concerns of rising costs and risk perception. Notwithstanding this news, Eurozone banks continue to remain optimistic that net demand for housing loans, consumer credit and business loans could see an uptick in Q2 2019.