Bloomberg News

European Loan Growth Unchanged at 2.5% in September, ECB Says

October 27, 2011

Oct. 27 (Bloomberg) -- Growth in loans to households and companies in the 17-nation euro area held steady in September, the European Central Bank said.

Loans to the private sector grew 2.5 percent from a year earlier, the same as the annual rate in August, which was revised down from 2.6 percent. The rate of growth in M3 money supply, which the Frankfurt-based ECB uses as a gauge of future inflation, rose to 3.1 percent from 2.7 percent in the previous month.

Euro-area services and manufacturing output shrank at the fastest pace in more than two years in October, adding to signs the region’s economy is cooling amid the sovereign debt crisis. European leaders today announced a deal under which holders of Greek debt will take losses of 50 percent, banks will raise core capital to 9 percent and the firepower of the region’s bailout fund will be boosted in an attempt to resolve the crisis.

“Bank recapitalization in itself could exert a dragging force on lending in the euro area,” said Laurent Bilke, head of inflation strategy at Nomura International Plc in London. “At the same time, if the debt crisis situation overall improves, this will ease financing conditions.”

M3 grew 2.6 percent in the three months through September from the same period a year earlier, the ECB said. M3 is the broadest gauge of money supply and includes cash in circulation, some forms of savings and money-market holdings.

--Editors: Matthew Brockett

To contact the reporter on this story: Jeff Black in Frankfurt at Jblack25@bloomberg.net

To contact the editor responsible for this story: Matthew Brockett at mbrockett1@bloomberg.net


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