Market Environment

According to Eurostat, GDP rose by 0.4% q/q in the Euro Area and the EU28 in the first quarter of 2015. According to the April 2015 European Central Bank lending survey, banks continued to report easing of lending standards in the first quarter.

Lending standards eased to a greater extent for small-and-medium enterprises (SMEs) than for large enterprises. Short-term loans standards also continued to ease to a greater extent than longterm loan standards. Competition between banks was far and away the strongest factor in easing lending standards, although bank liquidity positions and market financing contributed to a lesser extent.

Net loan demand also rose in the first quarter, albeit to a lesser degree than in the prior quarter. The need for working capital and debt restructuring were the most influential drivers of greater demand, constrained by debt issuance and internal financing.