French lending tightens in third quarter: data

7th October 2011, Comments 0 comments

Business lending conditions in France tightened moderately during the third quarter for the first time since 2009, the Bank of France said Friday amid concern the eurozone debt crisis could spark a credit crunch.

The balance between banks reporting tightening versus a loosening of lending conditions came in at 28.5 points, its first reading of tighter conditions since the second quarter of 2009.

The tightening was roughly the same for large companies at 28.8 points as for small and medium-size enterprises at 28.5 points.

During the period from July to September "lending conditions for companies tightened more than expected from the previous survey," said the Bank of France.

"At least a third attributed this tightening to balance sheet limitations and bank financing rather than an increase in their risks, and came primarily at the end of the quarter," it added.

Eurozone state are scrambling to prevent a credit crunch as banks find it more difficult to raise financing from markets over concerns about their exposure to the eurozone debt crisis.

France and Belgium stepped in Tuesday to guarantee the financing of Dexia and signalled they intend split up the cross-border bank, making it the first European bank to be dragged down by the eurozone debt crisis.

Dexia was heavily dependent on market financing for its operations, and its near collapse has put pressure on the eurozone to get bank recapitalisation measures in place.

© 2011 AFP

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