Banks have money at zero cost of the ECB but slowing business loans – Daily News – Lisbon

institutions have 18,600 million lent by the European Central Bank at no cost and may get even more 31.4000 million from June

the credit given by banks operating in Portugal to private companies is in continuous decline since 2010. However, the bank has gone to get cheap credit to the European Central Bank (ECB) and deposits the institution to already exceed the outstanding loans. This money deposited is standing there, not going to the economy. This situation may worsen, since the ECB promises that from June, will lend more and with an interest rate of 0% or even negative, without forcing the bank to return the “leftovers” that are not transformed into credit .

How it is that Portuguese banks have in volume of loans from the ECB? It was 18,600 million a month, up from 15,400 million in February last year. And how much is deposited at the ECB, that is, stopped without surrendering any euro to the economy or even the national bank (the interest rate is negative)? Are 25.9 thousand million billion, a figure that is increasing since November 2015. The money circuit was finished in private companies, but these, despite a credit volume of 81.3 thousand million, are receiving less since 2010.

the Portuguese Banking Association, the Caixa Geral de Depósitos, BPI and BCP chose not to react, it was not possible to get the talks with Santander Totta, but sources close to the sector have left to stress that the problem may be more in demand for credit by businesses and less on banking will to curb lending.

“There is money and credit available to businesses in all banks to good projects, but there is no appetite, there is demand. it is not only in Portugal, but it is natural that after a crisis people do not want to take too much risk at the moment, prefer to have a more balanced assessment “, according to a source connected to a . of the largest banks operating in the country

“the situation is almost paradoxical: the banks are flooded with money from the ECB, at a price [interest rate] of 0%, but by no means are grant more credit. Only governments can they help by lowering taxes and cutting public spending, “suggests Paul Rose, an economist and frame Banco Carregosa.” As in any other sector, banks try to sell credit at a higher price than you bought the ECB or captured through deposits to its customers. And as with other goods or services, the propensity to consume increases as the price drops. Economic agents only take new money if that credit is cheaper, “adds

Portugal has a chance to get up from 31.4 billion in long-term loans. – The so-called targeted long- term refinancing operations (TLTRO), now in version 2.0 -. from June calculations belong to Silvia Merler, researcher at Bruegel think tank based in Brussels banks operating in Portugal obey the same rule of its partners in the euro zone. :.. can fetch an amount equivalent to 30% of outstanding loans to 31 January 2016 (before it was only 7%) This is the good news

the bad news is also given by Silvia Merler. in the previous version, which began in September 2014, demanded to banks refund to the ECB the amounts not used for lending to the economy. “the TLTRO 2.0, however, does not provide for any such mechanism. The reason for this change is unclear and seems to contradict the logic of these loans, “he said.

” Banks lend to the economy, but also apply in its own portfolio of stocks and bonds. The measures of the ECB, including the announced March 10, will continue to inflate the capital market without a reflection on the real economy, “says Paul Rose.

 “The investment not started and inflation is far from the 2%. The fault lies with the banks? We want to lend, but can not be an open door logic. We are arrested for taking risk and its opposite,” said an industry source .