Ireland recorded a 12.5pc decline in corporate lending – its steepest drop since July 2011.
The figures from the European Central Bank showed corporate lending decreased on an annual basis in Italy, Spain, Portugal and Ireland, but continued to rise in Germany, Finland, France and Austria.
Weak lending has been one of the main impediments to growth as European companies rely mostly on funding from banks, which have been reluctant to hand out credit as they adapt to stricter regulation and went through the ECB’s landmark asset review.
The review concluded that roughly one in five Eurozone top banks failed the health checks at the end of last year – including Permanent TSB here – but most had since repaired their finances. Frankfurt hopes banks will feel in a more comfortable position to lend now that the review is over.
Lending in Italy continued to decline, falling 3.3pc compared to a year earlier, while Cyprus showed a slower decline of 0.9pc and Greece of 4.6pc.
Slovenia’s annual decline of 15.4pc was the fastest since records started in January 2005.
The ECB’s bank lending survey due tomorrow will also give more detail on how demand for loans is developing as the recovery slows.
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