Posts Tagged Finance
Study: Basel III makes bank loans for medium-sized companies more expensive
September 5th, 2011 | Thema: News
A scientific study only just published commissioned by the German Federal Association of Small and Medium-sized Businesses (BVMW) warns against negative consequences for German small and medium-sized companies of the planned equity capital regulations for banks (Basel III) currently being discussed by the Basel Committee on Banking Supervision. What researchers at Berlin’s Humboldt University and the Bergische Universität Wuppertal criticise is that the planned flat-rate increase in equity ratios will be disadvantageous primarily for bank lending to small and medium-sized companies. The reason: the banks’ credit business has to bear a total of two-thirds of the additional capital requirements, whereas the essentially riskier commercial business only a third. In the opinion of the economists this risk weighting is unrealistic and ultimately unfair, because it ascribes too high a risk to company loans, thus making them unnecessarily expensive.
In order to be able to gauge the impact of Basel III on bank lending to small and medium-sized companies, the study analyses the Basel III proposals in a simulation model. The outcome: the likeliest scenario is a 2.47 per cent reduction in the lending volume and a 0.54 per cent increase in average interest costs by 2019. Based on these results the scientists calculate that the introduction of Basel III in the form planned by the Basel Committee and the EU Commission will entail a 2 per cent reduction in the total turnover and revenue of German small and medium-sized companies.
Stable financing situation in Germany
June 13th, 2011 | Thema: News
The financing situation is stable for most companies in Germany. However, credit conditions are not improving to the same extent as the currently very good growth. This is proved by the results of the survey “Credit Conditions Early Summer 2011” from the Deutsche Industrie- und Handelskammertage (DIHK, or German Chambers of Commerce). Only seven per cent of businesses recorded improved credit conditions. At the end of the year this figure stood at eleven per cent. For 76 per cent of those surveyed, i.e. the vast majority, credit conditions have not changed. In contrast, at least 17 per cent of companies spoke about generally worse credit conditions, despite good business activity. At the same time, however, access to credit has improved slightly. The rejection rate has fallen to two per cent. Despite the difficulties experienced by some companies with their financing projects, fewer and fewer business, namely 15 per cent, evaluate financing as an overall risk to their business activities. At the beginning of 2011 17 per cent thought this to be the case. In contrast, increasing raw materials prices and skills shortages are perceived as growing risk factors.
Furthermore, good financing conditions are an effective investment lever: according to the survey, businesses with improved financing conditions also have significantly higher investment intentions (investment plans: plus 44 points) than the economy as a whole (balance: plus 18 points). Thus the investment balance of all companies with improved credit conditions has risen by 12 points in comparison with the previous survey.