Credit in the euro zone still ralenti

FRANCFORT (Reuters) - The decline in corporate lending in the euro area continued in November, noting the slowdown in economic activity and providing an additional argument in favor of a further rate cuts Central Bank européenne.

Compared to November 2011, loans to the private sector declined by 0.8%, unchanged compared with October. Detailed statistics released Thursday by the ECB shows that the decline for both consumer credit and loans to entreprises.

"Weak loans undoubtedly due to lower demand from the nonfinancial private sector," said Howard Archer, economist at Global Insight.

"But what is worrying is that a number of companies who want to borrow (...) and are in good shape are hard to do, which means that the tightening of credit weighs on growth prospects for the euro area, "ajoute-t-il.

The ECB expects a contraction of 0.3% of the economy of the euro area this year and its Board of Governors discussed at its meeting last month of the opportunity of lower interest rates. The discussions resulted in a standstill, the refinancing rate, the main instrument of monetary policy, remaining at 0.75%, its lowest level historique.

data released Thursday show a steepening of the decline in consumer credit in November, from 3.1% yoy from 2.9% in October. Loans to non-financial firms themselves, fell 1.4% after -1.5% in octobre.

THE WTO, AN ARGUMENT FOR "FALCONS"?

More encouragingly, the growth of household deposits and those of non-financial companies has accelerated to 3.8% and 4.2% over one year respectivement.

"The contraction of business loans could be reversed if the renewed confidence generated by the mechanisms of relief of the ECB and the improvement of crisis management in the euro area financial markets spread to the real economy and if austerity begins to fade, at least in some countries, "said Christian Schulz, an economist at Berenberg Bank.

The ECB has contributed greatly to ease tensions related to the financial crisis in the euro area in recent months with the launch of the WTO (monetary transactions in securities), the new device support to countries in difficulty through purchases obligations souveraines.

Despite this relative calm, some analysts still consider requiring lower interest rates. Howard Archer expects thus a further easing in the first trimestre.

But such an assumption implies that the ECB Council to overcome its divisions, several of its leading members, such as the German Jörg Asmussen, Luxembourg's Yves Mersch or Belgian Peter Praet, who clearly expressed their réticences.

"The promise of potentially unlimited bond purchases (through the WTO) is the main instrument of monetary policy of the ECB," said Christian Schulz.

"To ensure credibility, the president (of the ECB Mario) Draghi will ensure it enjoys the widest possible support within the Board of Governors, which gives disproportionate weight to the 'hawks' and therefore probably prevent a further decline in rates to support the economy. "

Paul Carrel, Eva Kuehnen Sakari Suoninen, Marc Angrand for the French service, edited by Dominique Rodriguez