Banks in the eurozone expect to continue toughening their credit rules for firms and households in the first part of 2010, despite hopes the tightening cycle had peaked, the European Central Bank said on Friday. "All in all, a turning-point in the tightening trend observed since the second half of 2007 is now closer, but has not yet been reached," the ECB said in its latest quarterly Bank Lending Survey.

A net 4 percent of banks said they saw themselves tightening credit standards to firms in the first quarter, compared with the net 3 percent that toughened lending requirements in Q4 of 2009. House buyers and consumers also face a tougher time getting credit over the next few months, the survey indicated, despite previous hopes that the worst of the lending clampdown may have passed.

On firms' prospects, the report said: "Looking forward, euro area banks expect some further tightening of credit standards on loans to non-financial corporations in the first quarter of 2010, with net tightening potentially worsening slightly." "Banks appear to have reassessed developments in credit standards on consumer loans and, in contrast with the previous survey round, they no longer expect net tightening to come to a halt," the ECB said.

Copyright Reuters, 2010