Cross-border lending stable in Q1 of 2013

15th September 2013, Comments 0 comments

Cross-border lending was all-but-stable in the first quarter of 2013, despite an unprecedented rise in credit to emerging powers China, Brazil and Russia, the Bank for International Settlements said Sunday.

The Swiss-based BIS said in its quarterly statistics that such loans fell by $28 billion 21 billion euros) across the quarter, 0.1 percent down on the previous three months.

The BIS, which is often dubbed the central bankers' central bank, said two factors were responsible.

The first was a fall in interbank loans, notably from banks inside the 17-nation eurozone, which was nonetheless offset by a rise in credit granted by the non-banking sector.

From the beginning of January to the end of March, interbank loans declined by 0.8 percent to $137 billion, while those from the non-banking sector rose by 0.9 percent to $110 billion.

The second factor, meanwhile, was the rapid growth in loans to emerging economies, which contrast with the fall in credit in developed nations.

The BIS said that interbank loans to emerging economies reached a historic high, underlining that this was just the latest step in a long-term trend.

Cross-border loans to such economies rose by 8.4 percent during the quarter, reaching $267 billion. Brazil, China and Russia accounted for 85 percent of the growth.

While more than half of loans to emerging players were issued in offshore financial centres, the BIS noted that European banks were increasingly active in the field.

Loans to emerging economies by eurozone-based banks, notably those in France and the Netherlands, rose for the first time since the second quarter of 2011.

In developed economies, however, credit continued to fall.

Cross-border loans in Britain fell by 4.0 percent, while those in the eurozone were down by 2.7 percent, marking their fourth consecutive quarterly decline.

In the United States the fall was 0.8 percent, the sixth in a row, but the BIS noted that it was less sharp than in previous quarters.

Japanese banks, meanwhile, returned to their position as the world's largest providers of cross-border credit, a position they had lost in the aftermath of the crisis in the 1990s.

They increasingly have been lending out of their offices abroad, whereas the share of cross-border claims booked in Japan has been declining, the BIS said.

© 2013 AFP

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