Small business loan costs fall across euro zone, remain uneven

FRANKFURT Wed Oct 2, 2013 8:06am EDT

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FRANKFURT Oct 2 (Reuters) - Banks charged companies in most euro zone countries less to borrow in August, although firms in the south of the bloc still often paid more than twice as much as those in the north, ECB data showed on Wednesday.

High interest rates in the crisis-hit euro zone's indebted southern states continue to hamper the European Central Bank's efforts to steer the bloc's economy back to robust growth.

The ECB must treat all banks in the 17 countries that use the euro alike, regardless of the financial strains any individual state may be experiencing, and cannot tailor its policy to each country separately.

* The rates banks charged on corporate loans of between 250,000 euros and 1 million euros ($340,000-$1.35 million), used mainly by small and medium-sized enterprises, or SMEs, fell by 12 basis points in the euro zone in August from a month before.

* The situation is still very uneven across the bloc, however. The ECB's measure of country-to-country variation in SME loans reversed July's gains and was at the same level as in June.

* Cyprus, which was bailed out by its euro zone peers earlier this year, saw the biggest reduction in borrowing costs, down more than a full percentage point, although its SMEs still face the highest interest rates in the bloc.

* Rates for SME loans also fell in Spain, where they reached their lowest level since February 2011, but rose slightly in Italy, to an average 3.85 percent from 3.81 percent.

* Loan rates for smaller Spanish and Italian companies remained more than twice as high as those in Belgium, whose SMEs paid the lowest borrowing costs in the bloc.

* Interest rates for new corporate loans of more than 1 million euros also fell in August, to an average 2.17 percent for the euro zone as whole - the lowest level since May 2010, when Greek debt crisis intensified.

* Country-to-country variation on large corporate loan interest rates increased slightly and remains well above levels seen before last year.

* The reduction in interest charged for large business loans was again most pronounced in Cyprus, falling below Greek levels.

* But larger Cypriot and Greek firms have to pay more than 5 percent in annual interest, compared with less than 2 percent for their competitors in Austria, Germany, France and the Netherlands, the data showed.

($1 = 0.7393 euros) (Reporting by Sakari Suoninen; Editing by Catherine Evans)

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