W5_Bloomberg_2011_09_20 - Debt Crisis Infects Companies via...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Debt Crisis Infects Companies via Surging Cost of Bank Loans: Euro Credit Banks in Spain and Italy are curbing loans and charging customers more as aftershocks from the sovereign debt crisis drive their own borrowing cost higher. “They can’t lend what they don’t have, I suppose,” said Francesc Elias, the owner of Bomba Elias , a pumps and filters maker near Barcelona , which shelved a 100,000-euro ($144,000) plan to open a Bahrain office when it couldn’t get an affordable bank loan . “The banks are very clever about finding new ways to charge us more.” Spanish and Italian government bond yields surged to euro- era records this quarter as Greece struggled to avoid default, driving the cost of insuring against nonpayment by the region’s banks to a record and making it harder for them to sell bonds. Spain pays 5.35 percent for 10-year money, up from an average of 4.07 percent in the first half of 2010, while Italy pays 5.65 percent compared with a 4.05 percent average last year. As a result, banks such as Banco Santander SA (SAN) , Spain’s biggest lender, are passing higher funding costs on to their customers. Santander’s return on Spanish loans rose to 3.63 percent in June from 3.37 percent in December, as the yield it pays on deposits fell to 1.32 percent from 1.54 percent. UniCredit SpA, Italy’s biggest lender, said on Aug. 3 it’s being more selective about who it lends to and levying higher rates. One out of three companies asking for credit in the second quarter period didn’t get it or obtained less than they asked for, according to Confcommercio, an Italian retailers’ lobby group. ‘Increasingly Stringent’
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 10/17/2011 for the course ECON 182 taught by Professor Kasa during the Spring '08 term at University of California, Berkeley.

Page1 / 3

W5_Bloomberg_2011_09_20 - Debt Crisis Infects Companies via...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online