ECONOMY

Bank lending still losing steam

Greece’s credit expansion slowed in February to an annual pace of 12.9 percent, as lending to households and businesses continued to decelerate, despite the government’s liquidity plan. Data provided yesterday by the Bank of Greece, the country’s central bank, showed total lending in the economy slowed to an annual pace of 12.9 percent last month, from 14.6 percent in January, to 250.5 billion euros. The growth rate stood at 15.9 percent in December. The Greek government is hoping to keep credit expansion above an annual pace of 10 percent in order to fuel the economy’s targeted 1.1 percent expansion rate for 2009. However, senior bank officials have admitted that this goal could be missed due to the downturn. Data showed that the rate of new loans in February taken out by businesses and households slowed across the board. Lending to tourism and farming showed the steepest drop, while funding to shipping and the trade sector appeared to be much more stable. Government officials have repeatedly called on banks to keep the lending tap turned on but bankers claim that demand for their services has dropped off sharply due to the crisis. Earlier this month, banks had used up about a third of the government’s 28-billion-euro bank support scheme designed to boost liquidity in the economy. The plan includes capital injections via the sale of preferred shares to the state, guarantees on bank debt and liquidity support through special government bonds. February’s figures for lending to households show that the annual pace of new mortgages and consumer loans remained around the 10 percent mark. In February, the amount of new mortgages issued grew by 9.6 percent year-on-year to 78 billion euros, versus an annual pace of 10.6 percent in December.