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Sept. 14 (Bloomberg) -- Cross-border lending by global banks rose by $580 billion in the first quarter, the first “substantial” increase since 2011, the Bank for International Settlements said.
Cross-border claims of banks reporting to the BIS rose 2 percent to $29.4 trillion in the three months through March, the Basel, Switzerland-based institution said in a report released today. That was driven by a 1.7 percent expansion of lending to other banks, the first quarterly rise in more than two years, the BIS said. Loans to banks in the euro area climbed by $104 billion after seven quarters of contraction.
“The expansion was broadly spread across countries and sectors,” said the BIS, the record-keeper of the world’s central banks. “Claims on both advanced and emerging-market economies grew considerably.”
The rebound of interbank lending came as European banks bolstered their balance sheets in preparation for a health check undertaken by the European Central Bank, which will take on oversight of the region’s 130 biggest banks in November. Companies including Lloyds Banking Group Plc, Raiffeisen Bank International AG and Piraeus Bank SA sold new shares to boost reserves in the period.
Lending to Chinese borrowers increased the most, taking the stock of cross-border claims on the country to more than $1 trillion at the end of March, almost twice the amount they had at the end of 2012, the BIS said. That took the annual growth rate to 49 percent. Almost three quarters of the total is lending to banks in China, according to the BIS.
While lending elsewhere grew, residents of emerging Europe borrowed 1.9 percent less from banks reporting to the BIS. The fourth straight quarter of contraction was driven by lower lending to Turkey and Poland, while loans to Hungarian borrowers increased.
As the Ukraine crisis and the dispute with Russia escalated in the first quarter, a corresponding decline in lending was predominantly due to the plunge of the currencies versus the U.S. dollar, the BIS said. Exchange-rate adjusted claims on Russia were “virtually unchanged” in the first quarter, while those on Ukraine fell by $1.5 billion, or about 10 percent, in the quarter.
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