(new: EY survey on bank lending)

HAMBURG/FRANKFURT (dpa-AFX) - The recent bank turmoil will lead to more corporate bankruptcies this year, according to credit insurer Allianz Trade. For Germany, the insurer's Allianz subsidiary expects an increase of a good fifth (22 percent) on the previous year, to about 17,800 cases. "Due to the now even more restrictive lending policies of the banks, more companies are likely to get into difficulties than expected at the beginning of the year," Allianz Trade explained on Tuesday. Previously, a 15 percent increase in corporate insolvencies had been predicted in this country. Even before the turmoil, many banks were looking to cut back on lending, according to a survey.

"This is still not a wave of bankruptcies, even if a double-digit increase initially gives the impression that it is," said Milo Bogaerts, head of Allianz Trade in Germany, Austria and Switzerland. In his view, the problems of banks in the U.S. and Switzerland are also leaving their mark in Germany: "With interest rates rising significantly, rather weakly financed companies run the risk of getting into trouble."

The rapid and sharp rise in interest rates had brought down several regional banks in the U.S. in mid-March. Share prices of banking houses worldwide came under pressure. Credit Suisse, a major Swiss bank that had already been struggling, was bailed out in mid-March by an emergency sale to UBS. However, central banks, politicians and bank representatives emphasized the resilience of the banking system in Germany and Europe.

The Munich-based Ifo Institute recently concluded in a survey that companies in Germany are once again finding it easier to obtain loans. Whereas in December, 30 percent of companies reported that banks were still reluctant to lend, in March the figure was only 22.7 percent. "The turbulence at some international banks has had no effect on lending in Germany," concluded Klaus Wohlrabe, head of the Ifo surveys.

However, bank customers must prepare for higher requirements, rising costs and more frequent rejections of loan applications, according to the auditing and consulting firm EY. According to an EY survey published on Tuesday, 67 percent of institutions are planning to scale down lending. Only 15 percent of the financial institutions surveyed last October planned to grant more loans in the coming twelve months. A year earlier, the figure was 61 percent. Given a difficult economic environment with high inflation and rising interest rates, 86 percent of the 120 bank managers surveyed believe loan defaults are likely.

"Banks have no choice but to take a more restrictive approach to lending," explained EY partner Christoph Roessle. "This is because the German financial regulator has been stipulating since last year that credit institutions must build up additional capital buffers as a precaution against possible setbacks in the real estate market, for example." The capital buffer is intended to increase the resilience of credit institutions to crises.

According to official data, the number of corporate bankruptcies in Germany rose last year for the first time since the global financial crisis in 2009. Extremely higher energy prices, high inflation and consumer reticence forced more entrepreneurs to go out of business again. Nevertheless, the figures remained very low by long-term standards.

"Even by the end of 2023, Germany is unlikely to have reached pre-pandemic levels," Allianz Trade expert Bogaerts predicted. "That should only be slightly exceeded again after a further six percent increase in insolvencies in 2024."

Allianz Trade estimates that global insolvency figures will also rise by a good fifth (21 percent) in the current year from their recent comparatively low level. Here, too, the credit insurer expects that the level of the pre-Corona year 2019 will not be nearly reached again until 2024.

"Germany continues to perform well in a European comparison," Bogaerts said. "However, the momentum in the increase of bankruptcies has now aligned with what is happening globally as normalization takes place." This is no reason to panic, he said, but it is cause for caution."/ben/mar/DP/stw