Companies now offered more loan financing than they want
"No call for money, even though it is available again"
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The shortfall of funding in the banks' financing of companies that began a year ago has turned into an oversupply.
Finnish banks in rude good health at present would be willing to lend companies money at ever cheaper rates, but the businesses - hit by the recessionary conditions - are reluctant to invest.
According to Roger Wessman, Nordea's Research Director for Finland, the banks' problem is that companies are not interested in their money now that it is available once more.
Wessman says that companies are not making investments in expansion but need money only to replace other investments at best.
The money is not finding buyers, even though on the corporate side margins have come down quite appreciably, with risk premiums having more than halved since the spring.
The taps have been opened by the banks now that the prices that they themselves pay for money have declined.
Last winter the best banks were paying more than 2%-points over the euribor rate for five-year borrowing, and the banks naturally could not pass on this money on any more attractive terms.
At its worst this meant that the best companies could have been paying a 4%-point margin on loans. On the bond market the more risky companies were paying 10%-point margins and more.
These figures have come down quite considerably and now a loan from the bank can be had with a margin of around 1%-point.
Finland appears to be a little island of its own within the EU, in that the banks here are in quite good shape. With companies, meanwhile, the situation is quite the reverse.
They are asking after working capital in some cases, but any decisions on investment borrowing are being put off until things start to pick up again.
The fact that corporate loans can be had these days for not much more than 2% interest (the Bank of Finland's average figure for new company loans in august was 2.18%) demonstrates the huge difference between this recession and the last in the early 1990s, when average borrowing rates were between 12 and 15%.
Helsingin Sanomat
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| 13.10.2009 - TODAY |
 Companies now offered more loan financing than they want |
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