Italian bank lending to firms shrinks at record pace in November

FRANKFURT Fri Jan 3, 2014 4:31am EST

FRANKFURT Jan 3 (Reuters) - Bank lending to Italian companies fell at an annual rate of 5.9 percent in November, the sharpest decline since the statistics began 10 years ago, European Central Bank data showed on Friday.

Although the Italian economy is slowly emerging from its longest post-war crisis, lending has not caught up yet and continued to fall at an accelerating pace. Loans to firms shrank 4.9 percent in October from the same month a year earlier.

In a positive development for lenders, private-sector deposits picked up in November with a 0.5 percent rise from the previous month.

In Malta, bank lending to firms also shrank at a record pace, declining at an annual decline of 10.4 percent, the data showed.

Spain's decline in corporate borrowing in November was still the fastest on annual basis, at 13.5 percent below the level a year earlier.

One factor which could have made banks more hesitant to lend is a bank asset-quality review the ECB will conduct this year.

Before the ECB starts supervising banks from November next year, it will run a series of tests on the euro zone's largest lenders to uncover potential balance-sheet risks and capital shortfalls.

The asset-quality review is based on banks' balance sheet at the end of 2013. ECB policymakers have admitted that could have crimped lending in the last months of last year. (Reporting by Sakari Suoninen and Eva Taylor; Editing by Larry King)

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