2023-04-19 22:12:39
The Fed presented Wednesday its Beige Book (Beige Book), a barometer of activity carried out with twelve regions. (Photo: 123RF)
Lending volumes by banks in the United States ‘decline’ in March and early April, i.e. since the banking crisis caused by the bankruptcy of SVB bank, according to a bank survey US central (Fed) released Wednesday.
“Loan volumes and borrowing demand have declined for both personal and business loan types,” the Fed noted in its statement. Beige Book (Beige Book), a barometer of activity carried out among the twelve regions of the American central bank system.
“Several regions noted that banks have tightened lending standards amid heightened uncertainty and liquidity concerns,” the document details.
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In early March, Silicon Valley Bank (SVB) and Signature Bank went bankrupt following massive cash withdrawals from customers.
In the San Francisco area, where SVB’s headquarters are located, these withdrawals “would have stabilized since the end of March”, details the Beige Book.
But “loan activity has dropped significantly,” commented the regional branch of the Fed, quoted in the Beige Book.
“Lending standards have tightened significantly and several institutions have chosen to reduce lending volumes, particularly for new customers, despite ample liquidity,” it said.
This tightening of credit conditions was also observed on the other side of the country, in the Philadelphia area, south of New York, where “bank loans to businesses have declined”.
“Most contacts within the banking sector have confirmed a tightening of lending standards (…), following the bankruptcies of Signature Bank and Silicon Valley Bank”, further specifies the report.
And “several contacts indicated that they were focusing on lending to existing customers and had become more cautious in lending to new customers”, it is still indicated.
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U.S. Secretary of the Treasury — U.S. Secretary of the Economy and Finance — Janet Yellen, agreed on CNN on Sunday that U.S. banks might become “a little more cautious” in their operations, which might lead to a tightening of credit conditions.
A few days earlier, however, she had indicated that she had “not seen any evidence, at this stage, of a tightening of credit conditions, although that is a possibility”.
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