Asian lending cut by 66% in 1998 as economies slump
Asian lending cut by 66% in 1998 as economies slump
HONG KONG (Bloomberg): Banks cut lending to Asian companies and governments by two-thirds in 1998 from 1997, as international lenders decided not to sink any more money into a region where defaults were already rife.
One of the biggest retreats came from HSBC Holdings Plc, the U.K.'s largest bank and still one of the most active lenders in Asia. It took part in syndicated loans in the region worth US$2.6 billion in 1998 compared with $9.2 billion in 1997, a 72 percent decline, IFR Securities Data Co. said over the weekend.
In all of Asia, syndicated bank loans totaled $56.3 billion last year, compared with $128 billion in 1997, IFR said. Excluding Australia, total syndicated lending -- loans shared by more than one bank -- in the region amounted to $36.4 billion, about 66 percent less than the $106.4 billion a year earlier.
"China, Hong Kong and Malaysia showed sharply lower volume figures in comparison to previous years," said a statement by IFR-SDC, a firm that tracks financial market transactions.
"More severely affected were Indonesia, Thailand and South Korea, where virtually no bank credits were extended to the corporate sector in the whole of 1998."
Still, some banks increased the amount of credit sold to companies in the region.
Citibank NA, a unit of Citigroup Inc., was the top arranger of Asian syndicated loans, with transactions worth $6.12 billion completed in 1998, equal to a market share of almost 11 percent and more than the previous year, according to the IFR figures.
Chase Manhattan Corp. came in second place with $5.2 billion and a market share of 9.2 percent. Most of these two banks' loans were made to Australian borrowers, IFR said.
Taiwan was the only country in the region to receive more lending in 1998 than in 1997. Syndicated loans to Taiwan-based companies and projects totaled $7.20 billion, about 5 percent more than the $6.84 billion loaned in 1997.
The sale of debt securities, including U.S. dollar-denominated bonds and floating-rate notes, almost stopped completely.
"The Asian FRN market virtually disappeared," IFR said. There was a "handful" of issues in 1998, against 120 totaling $13.9 billion in 1997. Fixed-rate issuance dropped to $7.20 billion in 1998 from $25.7 billion in 1997.
Following are the top lenders in various countries:
Top Arrangers of Asian Syndicated Loans
Bank Loans Amount (billions) Mkt share(%)
Citigroup 58 $6.15 10.96
Chase Manhattan 37 $5.17 9.20
ABN Amro NV 62 $3.59 6.40
BankAmerica Corp. 46 $3.20 5.69
HSBC 33 $2.56 4.73
Top Arrangers of Asian Syndicated Loans Ex-Australia
Citigroup 55 $5.87 16.14
BankAmerica 43 $2.94 8.07
HSBC 33 $2.66 7.31
ABN Amro 57 $2.32 6.37
Warburg Dillon Read 7 $1.32 3.64
Top Lead Managers of Asian Fixed-Rate Bonds (including Japan, excluding Australia)
Goldman Sachs 19 $4.45 21.3
Morgan Stanley 10 $2.39 11.4
Salomon SB 18 $1.98 9.4
Warburg Dillon Read 11 $1.88 9.0
Nomura 7 $1.71 8.2
Top Arranger of Syndicated Loans in
Australia Chase Manhattan ($3.63 billion)
Hong Kong HSBC ($1.26 billion)
China HSBC ($860 million)
India BankAmerica ($376 million)
Malaysia Citibank ($350 million)
Philippines Philippine National Bank ($610 million)
Korea Citigroup ($390 million)
Taiwan Citigroup ($2.37 billion)