Sunday, September 16, 2012

International bank lending up in Q1, but still subdued - BIS

    International lending by banks rose slightly in the first quarter of 2012, reversing a $811 billion plunge in the fourth quarter, helped by a stabilization of lending among banks and a rebound in lending to emerging markets, the Bank for International Settlements (BIS) said.
    But despite a $126 billion, or 0.4 percent, overall increase in cross-border lending in the first quarter from the fourth, international lending remains subdued from a longer term perspective, BIS said in its latest quarterly review of international banking and financial market developments.
    As an example of the vitality of lending prior to the onset of the global financial crises, cross-border lending in the first quarter of 2007 had rocketed $2.2 trillion, BIS data shows.
     Figures from banks in the 44 countries that report to the Swiss-based BIS showed that lending to non-banks rose $154 billion, or 1.4 percent, in the first quarter of 2012, helped by a 3.1 percent rise in lending to emerging economies.

    Credit extended to non-banks in Latin America, which includes offshore centres in the Caribbean, showed “the largest absolute increase since the start of the BIS international banking statistics.”
    Cross-border interbank lending stabilized in the first quarter following a severe contraction in the fourth quarter, with 1.7 percent rise in lending to euro area banks as wholesale funding markets reopened following the European Central Bank’s longer term refinancing operations (LTROs).
    However, BIS pointed to the “distinct north-south divergence in cross-border lending to euro area banks.”
    While cross-border claims on banks in Germany surged by $271 billion (or 26 percent, - the highest quarterly growth rate in more than 20 years - interbank lending to banks in Ireland, Italy, Spain, Portugal and Greece decreased.
   International lending – especially from German and French banks - to residents of those five southern European countries shrank by $92 billion, or 4.7 percent, adjusted for foreign exchange effects, with lending to banks down 11 percent and to the public sector down by 5.4 percent.
    “Overall, the figures suggest that the two three-year LTROs conducted by the ECB in 2011 and 2012 did not unlock new foreign financing to these countries,” BIS said.
    Meanwhile, banks were eager to lend to residents in emerging markets, with lending rising $86 billion, or 2.8 percent, after a drop of $77 billion in the previous quarter.
    “It was the first expansion in three quarters, a possible indication of how these economies benefited from improving market conditions in the first quarter of 2012,” BIS said.
    Cross-border claims on emerging market banks rose $41 billion, or 2.5 percent and lending to non-banks rose by $45 billion or 3.1 percent.
    The increased lending to emerging markets was driven by banks in Asian offshore centres and from banks in the United Kingdom while euro area banks held their lending to emerging market steady following a fall in the fourth quarter.
    The Asia-Pacific region attracted 79 percent of the total rise in lending to emerging economies, with lending to China rising $54 billion, or 11 percent, primarily driven by interbank lending that rose 14 percent.
    Click to read the September 2012 BIS Quarterly Review.


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