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.