Banks commit to help fight economic crisis

“We bailed out the banks when they needed us. Now it’s time for them to give us their commitment,” Flemish Minister-president Kris Peeters CD&V said to the Flemish employers’ organisation Voka during his speech on Tuesday night. According to the banking federation Febelfin, Peeters’ subtle way of forcing the banks into dialogue was unnecessary as the sector had previously called for talks with Peeters and federal Finance Minster Steven Vanackere CD&V. Moreover the topics they intended to discuss, among them financing of export trade and longterm financing of major projects in infrastructure and school buildings, corresponded with the issues Peeters referred to. The general loss in confidence with which banks have been faced since the beginning of the financial crisis has created a serious problem for a sector that is driven by confidence. One of the reasons why the banks were therefore keen to talk with the government was the recovery of that civil confidence.
The criticism the financial sector suffered since the start of the financial crisis mainly concerned the strict conditions imposed to bank loans, but was repeatedly refuted by the sector, with figures showing the opposite. More recent National Bank figures however clearly show that the banks’ general unwillingness to extend credit is hampering government efforts to beat the crisis at a time they when they have hundreds of billions in savings accounts. Most banks’ available credit volume seems however to have remained stable. Neither is there a link with federal plans to approve a split between savings banks and investment banks, but Federal Prime Minister Elio Di Rupo PS plans to work on it during the next months. The banks and Kris Peeters would prefer to see it instituted on a European level in spite of the fact that during a plenary session in Parliament in 2009, the banks’ recommendations of a split were approved by the CD&V.
Peeters has already met with Febelfin’s top management to discuss the bigger role the banks can play as far as export financing is concerned, supported by the government in the form of state guarantees. They also tackled additional investments by banks in projects based on public-private partnerships. The banking sector constantly stresses they have extended 88 billion euros in loans since 2008 and therefore keep playing their  role in the economy. In any case, Peeters has few means left to put further pressure on the sector. The Flemish government helped to bail out several Belgian banks since 2008, but it has only directors in the boards of the KBC bank and the Ethias insurance company and none with Dexia. Peeters may have to resort to a moral stance and the effect of that is unpredictable.