International banking activity continued to rebound in the third quarter of 2014 following a contraction in the two previous years as cross-border claims rose by $493 billion, the Bank for International Settlements (BIS) said.
The Swiss-based organization said global credit extended by major international banks rose by around 5 percent at the end of September 2014 from the same period in 2013, up from an annual increase of around 1.0 percent at the end of June 2014.
Global banking activity contracted in 2012 and 2013 in the wake of the sovereign debt crises in Europe but started to rebound in the first quarter of 2014 as the appetite for risk by major global investors returned.
BIS, an organization of central banks that collects international banking data, said the increase in cross-border lending in the July-September period was concentrated in Japanese yen and U.S. dollars, with claims in yen up by an annual 15 percent.
“In contrast to the global trend, cross-border lending to emerging markets slowed in the third quarter of 2014,” said BIS based on preliminary data.
Although BIS did not provide details about the decline in lending to emerging markets, it noted that claims on Russian residents had contracted by $11 billion during the third quarter for an annual fall of 15 percent.
International lending to Russia declined throughout 2014 due to the uncertainty surrounding its conflict with Ukraine with credit down by an annual 10 percent in the second quarter.
The latest BIS data thus indicates an acceleration in the withdrawal of major bank lending to Russia borrowers during the July-September period.
Lending to emerging markets took a major hit in mid-2013 from the so-called taper tantrum when the U.S. Federal Reserve first raised the prospect of a pullback in asset purchases, triggering a major reversal of capital flows away from emerging markets and toward advanced economies.
But credit to emerging markets quickly bounced back, rising by an annual 10 percent in the first quarter of 2014 and by 12 percent during the second quarter, with lending to China again dominating capital flows.
China has become by far the largest borrower among emerging markets in recent years, with outstanding cross-border claims totaling $1.1 trillion at the end of June 2014 compared with only $311 billion on Brazil and just over $200 billion each on India and Korea.
Final data for third quarter global bank lending will be available in March when the BIS, known as the central banks’ bank, releases its quarterly review.