* Loans to private sector -2.3 pct in Nov vs -2.2 pct in Oct
* Corporate lending -3.9 pct in Nov vs -3.8 pct in Oct
* Decline in euro zone corporate lending steepest on record
* Weak lending data puts pressure on ECB to act
By Eva Taylor and Sakari Suoninen
FRANKFURT, Jan 3 Lending to companies in the
euro zone contracted at the fastest pace on record in November,
piling pressure on the European Central Bank to do more to
revive the currency bloc's economy.
The ECB has cut interest rates to a record low, pumped extra
liquidity into the banking system and announced a yet-to-be-used
government bond purchase programme, but the measures have so far
not reached all corners of the euro zone evenly.
"Worryingly, there is still no sign of any trend change in
bank lending to euro zone businesses, which heaps pressure on
the ECB to act," said Howard Archer, chief European economist at
"Banks likely believe the economic situation and outlook in
many euro zone countries still provides an uncertain and risky
backdrop in which to lend, despite the euro zone eking out
modest growth since the second quarter."
The ECB's upcoming health check of banks' balance sheets is
exacerbating the situation, with lenders reluctant to take on
more risk and trying to slim down their loan books instead.
ECB Vice-President Vitor Constancio said last month that
about two-thirds of the weakness in bank lending is due to a
lack of demand from firms and households, with credit supply
having some impact on the slump.
The ECB is unlikely to launch new measures when it meets
next week after its president, Mario Draghi, said earlier this
week there was no need for immediate action.
But over the next couple of months, the ECB could, for
example, decide to stop sterilising the value of its previous
government bond purchases, especially as it has now failed to
take out the full amount for three weeks in a row. This would
leave more liquidity in the system.
Corporate borrowing in the euro zone overall declined at the
fastest pace on record, November's 3.9 percent drop comparing
with a 3.8 percent decline on the year in the previous month.
The biggest decline was in Spain, where lending to companies
fell 13.5 percent, although the contraction was less steep than
Bank lending to Italian firms fell at an annual pace of 5.9
percent in November, the sharpest decline in the measure's
10-year history. That was also true for the euro zone's smallest
economy, Malta, which recorded a 10.4 percent drop.
Only five euro zone countries saw corporate lending grow in
November, with France the only large economy among them. Finland
showed the biggest increase, of 5.4 percent.
Companies in Finland pay an interest rate on loans roughly
one-third of that charged to their counterparts in Greece and
Cyprus, ECB data from October showed. The big variance in
borrowing costs for firms across the euro zone - now expanded to
18 members following Latvia's accession on Jan. 1 - is cited as
one reason for the uneven levels of corporate lending.
This divergence has persisted since the beginning of the
sovereign debt crisis in 2010 and has become a real headache for
the ECB, as its record-low interest rates do not benefit all
parts of the currency bloc equally.
Euro zone M3 money supply - a more general measure of cash
in the economy - grew at an annual pace of 1.5 percent, picking
up slightly from 1.4 percent in October and in line with the
consensus forecast in a Reuters poll of analysts.
(Reporting by Eva Taylor and Sakari Suoninen; Editing by