'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.