Economy minister tells banks to increase lending

AFP - [email protected] • 11 Nov, 2009 Updated Wed 11 Nov 2009 17:11 CEST
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New German Economy Minister Rainer Brüderle pressed banks Wednesday to increase lending to small- and medium-sized enterprises to support a recovery from the worst recession since World War II.

"Those who use taxpayer funds to clean up their balance sheets should also take responsibility for extending credits" to companies in the wider economy, Brüderle said during his first appearance before the Bundestag, or lower house of parliament.

He referred to hundreds of billions of euros used to bail out troubled German banks in the past two years, in particular the property lender Hypo Real Estate and Germany's second biggest bank, Commerzbank, which are now fully or partially state-owned.

The minister said he would create the post of "credit mediator" to help businesses obtain the money they need.

Since the global financial crisis intensified in September 2008, banks have been wary of lending, and have tightened credit conditions.

Last month, almost 42 percent of German companies questioned by the economic research institute Ifo said credit conditions were still restrictive in Germany, Europe's biggest economy.

Another poll by the chambers of commerce and industry found that 26 percent of German firms felt it had gotten harder to obtain credit from banks, the main source of financing for eurozone companies.

Banks often respond that demand from both businesses and households has fallen owing to the global economic downturn.

On Tuesday, Chancellor Angela Merkel also called on banks to make it easier to borrow funds, saying: "The financial sector's vocation is to help the economy function ... that should be revived."

European Central Bank president Jean-Claude Trichet and Geman central bank governor Axel Weber regularly issue similar calls, while acknowledging that much of the decrease in lending is a result of weaker demand.



AFP 2009/11/11 17:11

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