Regular readers are not surprised as this confirms your humble blogger's predictions of a financial regulator created credit crunch and that higher capital ratios would not unfreeze the interbank or private funding markets.
In a report published on Tuesday, S&P analysts warned that "deleveraging" by European banks was one of the industry's "defining" issues and that the €859bn borrowed by lenders from the ECB had not stopped credit availability from shrinking.
S&P points out that loans to eurozone residents shrank by 1.2pc year-on-year for the 12 months to the end of December, with Ireland, Spain, Portugal and Belgium among the countries showing a decline in loan growth.
The declines come despite the ECB pumping €489bn into eurozone banks in December as part of a new three-year lending facility, which took the total borrowed to more than €800bn....
At the end of this month, the ECB will allow banks to borrow three-year money for a second time, with most analysts expecting lenders to borrow at least a further €500bn.
However, S&P said this was only a form of "emergency relief" providing "breathing room" for banks struggling to find private sources of funding.
"The pace and scope of deleveraging will be one of the defining issues of the eurozone banking industry in the years to come. Although the very large amount of loans from the ECB may slow down this process, we believe banks in Europe will use them more for liability management, namely, paying off maturing wholesale debts that fund assets already on the balance sheet," said S&P.