Global cross-border lending continued to expand in the first quarter of 2015, propelled by a surge in lending to the euro area, while credit to emerging markets, such as China and Russia, fell for the second consecutive quarter, according to the Bank for International Settlements (BIS).
International lending by major international banks to non-banks and other banks rocketed by an estimated $755 billion from January through March this year from end-December compared with an increase of only $16 billion in the final quarter of 2014
The rise in global lending in the first three months of this year amounts to more than half of the entire increase of $1.457 trillion seen in 2014. After contracting by $1.148 trillion in 2013, global cross-border lending has been expanding since the second quarter of 2014.
As in the fourth quarter of last year, major international banks have been extending increasing amount of credit to advanced economies, such as Germany, while lending to emerging economies, especially China, has been slowing.
According to preliminary data, Swiss-based BIS said first quarter lending to advanced economies grew by $743 billion while lending to emerging economies shrank by $50 billion.
Lending to borrowers in euros jumped by $528 billion, for annual growth of euro-denominated claims to 9 percent, said BIS, which collects international banking data worldwide.
In contrast, global claims in U.S. dollars only rose by $58 billion as a $95 billion decline in loans was offset by a $156 billion rise in U.S. debt securities.
Cross-border lending to borrowers in the 19-nation euro area rose by $406 billion in the first quarter, the highest rise seen since the first quarter of 2008. Claims on Germany rose by $153 billion while France also saw a significant rise of $120 billion while lending to Spain, Italy, Ireland and Portugal was largely unchanged.
Reflecting the deep crises in Greece, global banks cut their lending by a further $22 billion in the first quarter, leading to a 28 percent fall on an annual basis. Based on an ultimate risk basis, the outstanding stock of foreign claims on Greek banks amounted to only $2.2 billion at the end of March compared with a recent peak of $31 billion at the end of June 2014.
Continuing the trend seen in recent quarters, global lending to China continued to drop in the first quarter. Lending fell by $56 billion, driven by a $64 billion decline in credit to China's banks. This brought the outstanding stock of global claims on China to $963 billion by the end-March.
After falling in the fourth quarter of last year, lending to several other emerging economies in Asia rose in the first quarter. Global lending to India rose by $8 billion and to Korea by $3 billion.
Lending to emerging Europe continued to decline, albeit at a more moderate pace than in the previous quarter, BIS said.
International claims on Russia dropped by a further $14 billion, following a $19 billion fall in the fourth quarter, but in contrast lending to Hungary and the Czech Republic picked up slightly and credit to Turkey expanded by $4 billion, boosting the annual growth rate to 9 percent.
The recent trend toward increased lending to non-banks also continued in the first three months, with cross-border lending to non-banks accounting for more than three-quarters of the total increase. Lending to non-banks was up by $569 billion in the first quarter compared with a $186 billion increase in lending to banks.
In 2014 international bank lending to non-banks rose by $868 billion while lending to other banks rose by $590 billion.
Click to read "BIS international banking statistics at end-March 2015."