Corporate lending on the decline in the Netherlands

Corporate lending on the decline in the Netherlands

The provision of corporate loans by Dutch banks has been decelerating for some time now. In September 2013, the portfolio of loans to Dutch businesses was down from the previous month. On balance, in September Dutch banks had nearly EUR 6 billion less in outstanding corporate loans than in August. Relative to September 2012, business lending was down 1.3%.

The decline in corporate lending has several causes. On the one hand, the demand for corporate loans has been slowing down for quite a while. As businesses invest less due to the unfavourable economic climate, demand for new loans is down and, on balance, businesses repay more loans than they take out new ones. On the other hand, banks have tightened the conditions on which they extend new loans. Under the present circumstances, banks see corporate loans as more risky.

In the period from October 2012 to September 2013, corporate lending was down well over EUR 4 billion. The strongest decline in corporate loans was observed in the most recent months, that is, September and August. The portfolio decreased by almost EUR 6 billion in September and by well over EUR 4 billion in August. At end-September, loans to Dutch businesses totalled EUR 345 billion, the vast majority of which with an original maturity of less than twelve months.

The decline in corporate lending is concentrated in the short term lending, in which cash pooling plays an important role. With cash pooling bank and customer agree to settle different current accounts (with positive and negative balances).

Source: dnb.nl

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