How will regulations affect Europe's credit supply?

What do European credit risk managers see ahead for credit supply and demand? That’s what FICO and Efma asked in the first European Credit Risk Survey, and the report, released today, shows a mixed response.

One thing risk managers across Europe agreed on is that regulations are likely to tighten credit supply. One-third of respondents said Basel III would cause consumer lending to decrease, and more than half of respondents said consumer protection regulations would lead to a decrease in consumer lending. Responses were different in the DACH region, but overall there’s a clear signal that regulations are causing lenders to be much more cautious.

And it’s not just credit supply that will be affected. More than 60 percent of respondents said new banking regulations will reduce profits from consumer and SME credit portfolios. That’s not good for banks, their stocks or their shareholders.

You can see more details in the European Credit Risk Outlook report. And we invite you to join us as we discuss the report at the inaugural Efma Credit Risk and Debt Management Conference, 17-18 February in Paris.