Lending to euro zone private sector falls again but at slower pace - ECB
FRANKFURT (Reuters) - Lending to euro zone households and companies contracted for the 29th month in a row in September, although at a slightly slower pace, despite the European Central Bank stepping up its efforts to get credit flowing again and revive growth.
Euro zone banks, especially in crisis-stricken countries, have tightened their purse strings in response to tougher capital requirements and a health check of the sector, while companies have held off investments, unsure of the future.
To solve the problem, the ECB has started offering banks four-year loans at ultra-cheap rates and has begun buying covered bonds. It also plans to buy asset-backed securities to ease the burden on banks' balance sheets and entice them to lend, but these measures will take time to gain traction.
In September, loans to the private sector fell by 1.2 percent from the same month a year earlier, after a contraction of 1.5 percent in August, ECB data showed on Monday.
Euro zone M3 money supply - a more general measure of cash in the economy - grew at an annual pace of 2.5 percent in September, up from 2.1 percent in August.
On Sunday, the ECB released the results of its health check of the banking sector, which showed that roughly one in five of the euro zone's top lenders failed the landmark exercise at the end of last year, but most have since repaired their finances.
ECB Vice President Vitor Constancio said after the release of the results that the health check would help ensure the availability of credit, but he added that there was a lack of overall demand in Europe.
(Writing by Paul Carrel; Editing by Gareth Jones)
