RI becomes one of world's biggest borrowers: BIS
RI becomes one of world's biggest borrowers: BIS
BASEL, Switzerland (AFP): South Korea, Indonesia and China were the largest Asian borrowers in the second half of 1996 as regional demand for credit remained buoyant, the Bank for International Settlements said in a report issued here yesterday.
In contrast, Thailand, besieged by speculative attacks on its currency and a gaping current account deficit, experienced a drying up of financing, the BIS said.
Fresh loans to Asia in the six-month period totaled US$31.3 billion, compared to US$34.4 billion in the preceding half year.
Globally, banks reporting to the BIS lent $77.8 billion outside of the home spheres, compared to $61.8 billion in the first half of 1996.
Asia's short-terms loans (up to and including one year) were less prominent in the share of new credits compared to the first half (40 percent, against 60 percent).
However, the proportion of Asia's short term banking debt remains the highest among the major borrowing groups.
South Korea's membership in the Organization of Economic Cooperation and Development (OECD) helped boost syndicated loan borrowings and more than offset a weakening economic and financial environment towards year-end, the BIS said.
South Korean borrowings totaled $12.2 billion in the six-month period.
In China, two thirds of the $4.7 billion in new loans went to the non-bank private sector whose appetite for funds was dictated by trade, foreign direct investment and private project activities.
Outstanding credits to China totaled $55 billion at the end of last year, according to BIS figures.
"High domestic interest rates and sustained strong economic growth in Indonesia, the Philippines and Malaysia continued to act as a magnet for banking funds," the report said.
New measures adopted by Indonesia, where fresh lending was $6.3 billion, to discourage short-term capital inflows appear to have had little impact on banking lending.
Thailand secured just $1.9 billion of credits, as factors including restrictive measures on capital imports, a large current account deficit, a weak stockmarket and the emergence of strains in the financial system, took their toll.
"These developments may have contributed to the dampening of earlier enthusiasm of some lending groups for establishing a market presence in Thailand" the BIS said, adding they helped to explain the sharp reduction in the share of interbank funding and of the short-term debt category.
Fresh loans to India totaled $1.3 billion, bringing its borrowings to $58.6 billion at the end of last year.
European banks remained leaders in cross-border lending, accounting for some 60 percent of the increase in claims processed in the period.
In contrast, Japanese banks played a more subdued role, reflecting notably continuing high foreign funding costs and a rethink of their international strategies following difficulties at home, the report said.
They also "displayed a tendency to diversify away from Thailand," their most popular Asian market during 1994-1995.
Japanese banks are the largest individual creditors in Asia, with nearly one-third of the total outstanding exposure among institutions lending to the region.
U.S. banks had booked 11 percent of all Asian loans and European banks 42 percent at end-1996.
Aggregate lending by BIS reporting banks to Latin America was $23.2 billion in the second half of 1996, with Argentina ($5.5 billion) and Brazil ($4.8 billion) the biggest loan consumers.
Loans dwindled to the Middle East and Africa, where a one billion dollar drop in credits to Algeria had a large impact.
Eastern Europe took on $13 billion of new debt, more than triple the amount in the preceding half-year period. Russia piled on $5.76 billion in new credits, followed by $3.4 billion for Hungary.
Greece was the biggest market among developed countries, which amassed almost $12 billion in fresh loans during the period under analysis.