Cross-border lending shrank in 2012: Bank for International Settlements

ZURICH (AFP) - Cross-border lending fell by 1.2 per cent in the fourth quarter of 2012 from the previous three months, the Bank for International Settlements said on Sunday.

The Swiss-based BIS - often dubbed the central bankers' central bank - said in its quarterly statistics that such loans fell by US$345 billion in the October to December period.

Taking the fall into account, the total sum of cross-border loans stood at US$29.3 trillion at the end of 2012, down by 1.9 per cent on the level of 2011.

"Across all reporting areas, banks curbed their cross-border exposure to advanced economies but increased it to emerging market economies and offshore financial centres," the BIS noted.

The fall in activity was particularly marked for euro-denominated loans, it said.

Its figures showed that cross-border lending to banks in the 17-nation euro zone shrank by 5.2 per cent, the third successive quarterly fall.

"This resulted from reduced claims on banks in Germany, France, Finland and Luxembourg," the BIS said.

Cross-border lending to British banks also fell by 2.6 per cent, after having rebounded in the previous quarter, and dropped by 5.2 per cent in the United States.

"This trend may be related to regulatory changes that contributed to reducing the reliance of US-chartered banks on wholesale funding raised outside the United States," the BIS noted.

Japan was a notable exception among advanced economies, with lending to its banks rising by 7.7 percent.

The BIS underlined that the fall in cross-border inter-bank lending was more pronounced than in previous years.

"Cross-border claims on banks and related offices in the euro area fell by about 8 percent in 2012, compared with 4 percent in 2011," it said.

"In the United States and United Kingdom, cross-border interbank activity shrank in 2012 by 16 percent and 6 percent, respectively. These declines compared with an increase of 2 percent for US banks in 2011, while cross-border interbank activity in the United Kingdom was broadly unchanged in 2011," it added.