Eurozone banks will ease business loan conditions in a pandemic

Eurozone banks expect demand for emergency loans to rise again in the second quarter. They want to influence this with the help of simpler lending standards, as government guarantees and liquidity measures come into force, the European Central Bank said on Tuesday.

Lending standards tightened in the first quarter. Because most of the continent is blocked to stop the spread of the coronavirus pandemic. The eurozone economy could shrink by one tenth this year, and firms are struggling to find financing to stay afloat until the economy resumes.

The ECB added that measures to ensure central bank liquidity and government guarantees will fully enter into force in the second quarter, so banks expect their credit standards to drop significantly within three months until June, the ECB added.

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