A lack of credit and steep borrowing costs for small- to medium-sized enterprises (SMEs) is ample proof of the fact that euro-zone monetary policy is not working. The European Central Bank has acknowledged this problem, and the fact that it is one of the factors that is creating unemployment.
The so-called troika of the ECB, the International Monetary Fund (IMF) and the European Commission, along with representatives of the European Banking Authority and a Spanish Treasury official, have been grilling Spanish lenders on the reasons behind the dearth of credit.
The troika is in Madrid as part of a follow-up assessment of the loan of some 40 billion euros granted to Spain to clean up its banking system.
In a document, to which EL PAÍS has had access, the so-called “men in black” list a series of questions to pose to local bankers on lending to SMEs. One of the questions is about bank projections for loans for this year and the next.
Another of the questions posed was whether the drop in loans to companies was the result of supply problems — overly high interest rates charged — or due to weak demand from SMEs. The troika officials also inquired whether lending to SMEs was significantly less productive and about the criteria used by banks to determine the solvency level of an SME.
Lack of credit is the major problem facing 25 percent of Spanish SMEs
The officials also delved into very specific aspects of bank lending policy, such as interest rates applied on a five-year loan of one million euros to an SME, and which factors — other than the cost of Spanish sovereign debt — were behind the decisions on those rates.
The troika has already met with officials from Bankia, Unicaja, Liberbank, Novagalicia, Cajamar, Bankinter and Banco Popular and was due to visit Kutxabank, Catalunya Banc, Sabadell and Santander on Thursday.
According to bank executives who met with members of the troika, the most common response on the question of a lack of credit for SMEs was a “lack of healthy demand, in addition to the fact that the new regulations regarding capital, provisions and debt refinancing put a lid on lending.”
According to the latest survey carried out by the ECB on SMEs’ access to credit in the euro zone, Spanish companies said a lack of credit was the major problem for 25 percent of those polled, compared with an average of 16 percent in Europe. Only Greek SMEs surpassed their Spanish peers in this respect.
The ECB survey also showed that 31 percent of Spanish SMEs believe that there has been a deterioration in the availability of bank credit in the past six months, compared with a European average of 22 percent.
According to figures for July, released Wednesday by the Bank of Spain, outstanding lending by banks was down 27.082 billion euros from June and was down 13 percent from a year earlier at 1.49 trillion euros.