Banks in the Eurozone tightened standards on corporate loans

The report of the October 2026 Bank Credit Survey (BLS), which was conducted by the European Central Bank (ECB) with the participation of 159 financial institutions in the Eurozone and is considered a critical indicator for monetary policy, has been published.

According to the report, banks in the Eurozone further tightened their lending standards for companies in the third quarter due to the risk perception created by the current geopolitical crises and sharp price increases and decreasing risk tolerance.

A net 9 percent of the banks participating in the survey reported that they made their approval criteria more stringent for corporate loans and 14 percent for consumer loans.

There was no change in housing loan standards.

Banks expect corporate and individual loan standards to continue to tighten in the fourth quarter of the year.

According to the report, high interest levels directly negatively affected companies' loan and credit line demands during the summer months.

The decline in fixed asset investments, especially of small and medium-sized enterprises, and their turning to alternative financing sources were the main factors suppressing loan demand.

On the other hand, there was a steady growth in the amount of loans requested by companies to finance their artificial intelligence infrastructure investments. While banks have not yet applied concrete numerical criteria in borrowing requests for this technology, they have limited their risk assessments to qualitative assessments for now.

Financial markets expect the ECB to keep policy rates constant at its meeting on Thursday, October 29, despite inflation rising to 3.8 percent in the region following the oil shock.

Analysts state that banks' tightening of credit taps supports the ECB's policy of restraining inflation.