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.
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