ECB open-minded on SME lending, wants others to help

ECB studying options to help boost SME lending, says Asmussen, adding ECB can help with liquidity but already done a lot; EU wants cheaper, more transparent bank account access for all

Reuters, DPA/Brussels

The European Central Bank has an open mind on what it could do to spur lending to small- and mid-sized businesses, though other EU institutions might be better placed to help, a top ECB policymaker said yesterday.

The ECB is concerned that banks, worried about taking on risk, are not lending to smaller businesses in the eurozone periphery and that this is starving such companies of funds they need to invest and help their economies grow.

With bank lending clogged up in the periphery, ECB interest rate cuts have only a muted economic impact.

To address the issue, the ECB is looking at ways to revive the market for asset-backed securities (ABS) to allow banks to pass some credit risk on to other investors, freeing them up to lend more while also meeting new regulatory standards.

ECB policymakers have not yet agreed on what do to, or the extent to which they could help revive the ABS market.

German newspaper Die Welt, citing a central bank source, reported in yesterdays edition that a majority of ECB Governing Council members seemed to be in favour of the central bank buying ABSs itself.

Responding to a question about the Welt story, Joerg Asmussen said ECB work on what it could do to spur lending to small- and mid-sized businesses (SMEs) was ongoing.

“We have an open mind to look at all things that we can do within our mandate and this relates to how can the market for asset-backed securities, especially backed by SME loans, be revived in Europe,” he told a European Parliament committee.

But the German ECB Executive Board member, generally a more hawkish member of the 23-man Governing Council, said the central bank was studying what it could do but that other EU institutions may be better placed to spur lending to SMEs.

The ECB could help with the provision of liquidity, Asmussen said, adding: “I think we have done a lot here.”

“Liquidity is not stopping, preventing banks from lending. It’s either lack of capital or an increased risk aversion that prevents them from lending.”

“For these two elements, capital and increased risk aversion, it might be more appropriate to other EU institutions, the Commission or the European Investment Bank (EIB) to act. But we will do within our mandate what we can do.”

Meanwhile, according to plans unveiled yesterday by the European Commission, EU wants cheaper, more transparent bank account access for all

Every EU resident should have access to a bank account and be able to compare and easily switch between service providers.

“Today I would almost compare the situation of not having a bank account (to) not having an identity card,” said Consumer Policy Commissioner Tonio Borg, adding that there were “too many obstacles, too much bureaucracy to open a bank account.

“This proposal allows consumers across the EU to access bank account services, to compare them and, if they are not satisfied, to switch to another provider,” Borg added.

Market Regulation Commissioner Michel Barnier said: “By making it easier to compare fees and change bank accounts, we also hope to see better offers from banks and lower costs.”

About 58mn consumers over the age of 15 within the EU do not have a payment account, according to the commission. There were no rules allowing consumers to compare prices, it said.

The banking industry had failed to adopt self-regulation measures agreed to in 2008, while many member states had not followed a 2011 commission recommendation on facilitating access to accounts, the EU’s executive said, prompting their decision to propose legally binding rules.

The European Consumer Organisation (BEUC) said it had called for such laws for many years.

“An unconscionable 10% of Europeans do not have an account, which basically cuts them off from simple means of renting a home or receiving social welfare,” said BEUC chief Monique Goyens, adding that few people switched accounts.

“Only when prices are more transparent and comparable can consumers force the sector to be more competitive by voting with their feet,” she added.

The proposals, which must be approved by the European Parliament and member states, would enable any legal EU resident to open a payment account anywhere in the bloc, including in countries they don’t live in.

At least one bank per country must make these basic accounts available under the measures, enabling withdrawals, bank transfers and a debit card, but they do not have to provide overdrafts or credit facilities.

“The payment services provider cannot use the financial situation of the person as a reason to refuse an account,” the commission said, while Borg said that banks would only be able to reject applications for “grave reasons” such as money laundering or other serious crimes.

Banks would have to state their fees for the 20 most common services, using standard formats for ease of comparison, under the proposals, while each member state would have to offer at least one independent price comparison website.

In addition, bank customers are to be provided with a regular breakdown of the fees they are paying for their banking services.

The commission wants to make it easier to switch bank accounts, by stipulating that it is the banks’ duty to transfer regular payments such as standing orders from one account to another — free of charge — within 15 days, or 30 days if the account moves to another country.

The commission found that, at present, only 19% of those who tried to carry over standing orders while switching to a new bank account were successful.