'Lending to Asia slowly picking up'
'Lending to Asia slowly picking up'
Alice Ratcliffe, Reuters, Zurich
International bank credit is once again trickling back to Asia
but remains well below the peaks hit in the pre-crisis period to
mid-1997, latest data from the Bank for International Settlements
(BIS) show.
The pick-up marks a recovery of sorts after crises erupted in
the region starting in July 1997 when Thailand devalued its baht
currency, just the first of a series of devastating shocks which
laid bare weaknesses in many Asian countries' financial systems.
The BIS wrote in a report to be published on Wednesday and
released in advance to the media that Southeast Asia "saw a
tentative pickup in international bank lending" in the fourth
quarter of 2001.
The Swiss-based organization, which serves as a bank and forum
for the world's central banks, released its report as part of a
regular quarterly survey on global lending.
It reported foreign claims in developing Asian countries,
including those made in local currencies, rose by 0.4 percent to
US$376.7 billion at the end of the fourth quarter of 2001 from
$375.2 billion at the end of the third.
The BIS has only recently begun including local currencies as
part of its claims data.
Taking data excluding local currency claims to make them
comparable to figures reported in the 1990s, international
lending to the developing Asia-Pacific region stood at $253.8
billion at the end of December 2001, a far cry from the pre-
crisis level of roughly $390 billion at end-June 1997.
Still, there were some signs of light on the horizon.
International claims on Malaysian-based borrowers rose by some
seven percent in the fourth quarter to $21.8 billion from 20.3
billion in the third quarter.
For Philippines borrowers the trend was similar with
international claims up 10.8 percent at $17.4 billion at the end
of December from $15.7 billion at the end of September.
One factor in some countries may have been renewed demand for
credit to fund regional electronics industries as optimism
returned on signs of a U.S. economic recovery.
But the picture was still clouded by uncertainties, including
in Indonesia where international claims contracted in the fourth
quarter, slipping seven percent to $33.9 billion from $36.5
billion at the end of the third.
The BIS data do not capture impact of recent positive
developments such as new loans to Indonesia by the International
Monetary Fund and a decision by Moody's Investors Services to
raise the outlook on Indonesia's sovereign rating to positive in
late April.
Foreign banks also have began to increase exposure to Russia,
which went into default on debt and devalued its currency in
1998.
The BIS said foreign claims on Russia "reached a trough in the
second quarter of 2001 and have since increased by approximately
10 percent".
It added much of the new lending there was for claims up to
and including one year, with the Russian energy sector one of the
main borrowers, comprising fully 43 percent of international
claims to Russia, totaling $40.3 billion at the end of December.
If anything, BIS data show banks have become more selective
about lending to sovereigns since the crises in the 1990s.
Prior to a near-collapse of Argentina's banking system in late
2001 banks had already reduced total lending to Argentina which
stood at $73.9 billion at end-December.
Data showed claims on all developing countries rose roughly
1.5 percent to $1.35 trillion at the end of the fourth quarter
from $1.33 trillion at the end of the third.
Claims to developing countries was only a fraction of total
claims of $11.49 trillion at the end of the fourth quarter, down
0.8 percent from $11.58 trillion at the end of the third.
The figures were not adjusted for the dollar's rise against
the yen and euro in the fourth quarter, meaning the amounts of
international lending reported Japanese and European banks in
respective currencies fell when converted to dollars.
Adjusting for a rise in the dollar in the fourth quarter,
global claims actually rose by about 0.5 percent.