ECB seeks way to unblock credit to SMEs

(BRATISLAVA) - The European Central Bank said Thursday it is seeking ways to get credit flowing to small and medium-sized companies in the countries worst hit by the debt crisis.

ECB chief Mario Draghi said the bank has decided to consult "other European institutions on initiatives to promote a functioning market for asset-backed securities collateralised by loans to non-financial corporations."

ECB watchers and analysts see the European Investment Bank as playing a key role.

While financial market tensions have eased in recent months and the region's banks are enjoying easier access to funding, available data suggest banks are still not readily lending to companies.

Draghi said the current weak loan dynamics "reflect the current stage of the business cycle, heightened credit risk and the ongoing adjustment of financial and non-financial sector balance sheets".

While the ECB's recent Bank Lending Survey saw "some signs of stabilisation", the survey on the access to finance of small and medium-sized enterprises in the euro area "indicates continued tight credit conditions, particularly for SMEs in several euro area countries", Draghi said.

"Moreover, the available information indicates high risk perception on the part of banks."