Merkel warns banks over tight lending habits

Merkel warns banks over tight lending habits
Photo: DPA
Chancellor Angela Merkel stepped up her warning on Saturday of a further credit crunch in Germany as she called on banks to meet their “responsibility” to lend money and help the nation’s fragile economic recovery.

“We have to realise here, that we are in a very critical situation,” she said in her weekly video address. “Therefore we say very clearly that we also call on financial institutions to fulfil this responsibility,” she said.

While stressing banks had to lend responsibly, they also had a duty to all of society as the source of vital capital for the economy, she said.

In October, nearly 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 got harder to obtain credit from banks, the main source of financing for eurozone companies.

For this reason, the government would propose a “credit mediator” at a scheduled economic discussion on Wednesday, Merkel said. Such an independent mediator would help businesses to get credit at reasonable rates.

Representatives of business, unions, banks and academia would take part in Wednesday’s summit, she said.

Stressing the economic crisis was not over for Germany, she said further pain would be felt in the next few months in the job market. The cost of rising unemployment and the Kurzarbeit scheme, whereby the government subsidises employees on shorter working hours rather than letting their firms lay them off, would be met by the nation as a whole, not just the workers and firms affected, she said.

Her call for more lending follows similar demands from her cabinet colleagues, who are ramping up pressure on the banks. Recently, Economy Minister Rainer Brüderle said German banks had a responsibility to the nation because of the hundreds of billions of euros that had been spent on bailing them out in the past two years.

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