Further fall in demand for financing in Europe

Outlook of financing in Europe
November 2012
Further fall in demand for
financing in Europe
The ECB Bank Lending Survey1 recorded a further tightening of
credit conditions in the 3rd quarter
No significant change expected in the 4th quarter
For the coming quarter, banks expect a further tightening of
At the end of the 3rd quarter, the ECB survey noted a new
financing conditions comparable to that observed since the start of
tightening of credit conditions to companies, rising from a net
the year and a contraction in demand, but to a lesser extent.
balance of 10% in the 2nd quarter of 2012 to 15% in the 3rd quarter
of 20122. Among the factors contributing to changes in financing
Real-estate financing
conditions, it may be noted that the cost or access to refinancing by
With regard to financing of commercial real estate, banks continue
banks contributes less and less to the tightening of access to debt;
to operate in a mixed economic environment, limited by their
conversely, economic expectations and business prospects heavily
objectives to reduce the size of their balance sheets but benefiting
affect the trend. The impact on financing conditions is evidenced by
from a general rise in margins. German banks, including those using
a new rise in margins on financing considered to be the most risky.
Pfandbriefe, remain the most active and most competitive in the
prime assets financing segment. Some international banks as well
as life insurance companies and debt funds, seeking higher yields,
are positioning themselves on core/core+ assets.
Source BCE
Many debt funds continue to be set up in Europe and France.
According to INREV, 19 debt funds have been created over the
past three years in Europe with a capacity of around 9 to 10
billion euros. Among the players who have entered this segment
we can cite La Française AM, AEW Europe, Acofi, Groupama AM,
and La Banque Postale AM, and other operators are apparently
positioning themselves on the French market.
Gradually, a new landscape is emerging with regard to real-estate
financing, with a greater diversification of financing sources.
A further fall in demand in the 3rd quarter
At the end of the 3rd quarter, demand for financing fell by 28%
following a 25% drop in the 2nd quarter. This trend is primarily
driven by the marked drop in investment financing needs
(−33%). It may also be noted that the fall in demand for bank
financing also comes from the use of other channels such as
bond issues, capital increases and the use of alternative sources of
financing.
1
The BLS measures the conditions for granting credit to companies and
households in the previous and next quarter.
2
The net balance is the difference between the percentage of establishments
having tightened their financing conditions and that of establishments having
relaxed their financing conditions. A positive net balance indicates a
tightening of financing conditions.
Through insurance companies and debt funds—and, to a lesser
extent, bond issues—the proportion of bank loans in Europe is
expected to shrink and approach that of the American model.
Pulse – Outlook of financing in Europe – November 2012 2
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