Large companies in Europe and the US are having the terms of their credit facilities tightened more quickly and more severely than smaller companies – in contradiction of received wisdom.  Surveys by the European Central Bank, US Federal Reserve and Germany’s Ifo economics institute all show banks tightening their lending criteria most for the largest companies. 

Possible reasons put forward for this shift in attitude include smaller companies enjoying a better relationship with their banks, and financial institutions shying away from making large loans and preferring to deal with local groups, rather than multinationals.  Another reason is that large companies drove the credit-fuelled expansion, which seems to be reversing itself.  Source: Financial Times

BIIA Newsletter Nobember 2008 Issue