Berlin urges banks to improve lending conditions

Bruederle is scheduled to meet representatives from Germany's top business associations and banks to discuss ways to ease the difficulties companies face funding investments.

Bruederle had harsh words for the banks ahead of the meeting on Thursday. He told German state broadcaster ZDF that "it is now for the banks to act," to improve lending conditions in the corporate credit market.

"Using taxpayers' money to help companies cannot always be our default option. The state cannot do the banks' job," he said.

German companies are finding it harder to obtain credit from their banks, according to the latest survey by the Federal Association of the German Chambers of Commerce (DIHK).

Paucity of credit

Although the DIHK does not see a general corporate credit crunch in Germany, its latest economic survey shows that a quarter of German firms have had issues with getting loans approved in the past six months. However, of the 28,000 companies polled, only 3 percent had been refused credit altogether.

Since investment is slowly picking up again after a dismal year in 2009, credit to fund those investments is essential for any recovery to take hold in Germany.

Last week, the four top business associations in Germany, the BDA, the BDI, The DIHK and the ZDH, called on the government to improve lending conditions to ease the crunch.

"The bureaucracy that companies have to deal with to obtain credit has increased significantly. The banks are often too cautious and demand high interest and more and more collateral," Dieter Hundt, President of the Federal Association of German Employers (BDA) told the daily Hamburger Abendblatt.

ng/AP/dpa
Editor: Jennifer Abramsohn