Irish banks again tightened up on lending to businesses and households in the second quarter of this year, according to the Central Bank.
The findings came in the Irish component of a survey carried out by the European Central Bank. This showed that the percentage of euro zone banks which are tightening loan standards for business and households has dropped sharply the past three months, though credit is still hard to come by.
The ECB survey for the second quarter of 2009 showed that the net percentage of banks tightening credit standards had dropped to 21% from 43% in the first quarter. That still meant that more of the 118 euro zone banks polled were making it harder to obtain credit than those who had left standards unchanged. None of the banks reported that they had eased lending conditions.
But the Irish part of the survey showed that banks tightened up on lending to businesses and households, while demand for loans fell. Banks said the drop in demand was most marked among bigger companies.
Banks in Ireland blamed an increase in the cost of funds, financial constraints and greater worries about risk for their tightening of lending to businesses. They also cited lower pressure from competition in the market.
While Irish banks said the Government guarantee and bank re-capitalisations had helped them to gain access to funds on international money markets, their access to funds was still restricted, and this was affecting their willingness to lend. The banks said they expected this situation to persist in the coming months.
