Around one in five banks across the eurozone expect companies to approach them for more credit as the year draws to a close, with those in Germany and France most optimistic, the European Central Bank said yesterday.

The upbeat forecast bodes well for an improvement in the bloc, where economic growth has been grinding to a virtual halt. Much of the blame for the slowdown has been blamed on a dearth of credit to firms to expand their businesses.

The outlook depends, however, on the country in question and banks in Italy, for example, remain downbeat about credit demand.

In its closely-watched survey of lending, the ECB asks banks whether they plan to make it easier for companies and households to borrow as well as how much demand they expect.

While the cost of bank loans has discouraged many companies, especially those in Greece or Ireland, for example, from borrowing, modest demand also reflects low confidence, as a conflict with Russia over Ukraine adds to the gloomy outlook.

Upbeat forecast bodes well for an improvement in the bloc

While most banks have not been changing their credit standards for companies that want to borrow, the ECB survey of more than 130 banks found that there was a slight positive tendency to do so.

Credit standards are the hurdles towards giving a loan such as the security that is required. On balance, a net 2 per cent of banks said they had lowered such standards, while a net 6 per cent expected them to further improve for borrowers.

Of those banks surveyed, a net 17 per cent expected demand for credit from companies to improve over the coming three months.

“These are small changes, we don’t expect them to change overnight. ECB Governing Council member Ardo Hansson and governor of the Estonian central bank told journalists. “But I think it is one positive factor.”

“Among the largest euro area countries, credit standards on loans to enterprises were eased in net terms in France and Germany, while remaining unchanged in Italy and Spain and tightening in the Netherlands,” the ECB said in the report.

“For housing loans, banks reported unchanged credit standards in Italy, Spain and the Netherlands, a noticeable net easing of credit standards in France and a net tightening in Germany.”

For a copy of the survey, visit www.ecb.europa.eu/stats/money/surveys/lend/html/index.en.htm.