Banks remain tough on lending

The majority of Greece’s small and medium-sized enterprises (SMEs) believe it is almost impossible to secure finance from a bank, indicating that lenders have failed to loosen the credit reins in spite of the government’s liquidity plan, survey results showed yesterday. The Athens Chamber of Commerce and Industry (EBEA) said a survey it commissioned found that 81 percent of businesses replied that «banks have essentially made lending to small and medium-sized firms from difficult to impossible… by imposing unfavorable terms.» «These businesses today have the biggest need for money so that they can cope with the crisis,» said EBEA, Greece’s largest chamber of commerce. Of the respondents that applied for a loan, only four in 10 managed to get the finance, making the operating environment for about a quarter of businesses «asphyxiating,» EBEA added. The survey questioned 635 businesses between March 11 and 26. Lending in Greece has sharply decelerated as the economy slows under the weight of the crisis. Credit expansion slowed in February to an annual pace of 12.9 percent, from 14.6 percent in January with lending to businesses and households both dropping off. 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. Early last month data showed that banks had used up about a third of the government’s 28-billion-euro bank support scheme designed to boost liquidity in the economy. However, banks do not admit to having turned off the lending tap – a practice adopted when a downturn hits in order to protect the quality of their balance sheet. National Bank, the country’s largest lender, said yesterday it has kept pumping money into the economy at a faster rate than its peers. «The flow of money into the sensitive area of small and medium-sized businesses is accelerating at a faster pace than the bank had budgeted for 2009,» it said in a statement. From the start of the year until now, National Bank has approved new loans for SMEs totaling 1.3 billion euros, corresponding to some 9,000 businesses and professionals, it said. [email protected] Hoteliers calling for help in credit crunch The Panhellenic Federation of Hoteliers called on the Bank of Greece yesterday to intervene and encourage certain banks to start lending to the vital tourism sector in order to avoid «unpleasant developments in the field and the Greek economy.» Andreas Andreadis, president of the federation, which represents 60 hotel groups from across Greece, called on Bank of Greece Governor Giorgos Provopoulos to stop the «anti-business practices adopted by some lenders.» «It is obvious that, in such difficult conditions, refusal to provide financing or burdening it with additional costs will bring negative results,» he said in a statement. In most cases, banks have been working with the same hotels for years and, given the sector’s positive long-term prospects, the guarantees offered to lenders are satisfactory, added Andreadis.

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