BIS consolidated international banking statistics for end-1998
31 May 1999
The BIS is releasing today its semiannual consolidated statistics on the maturity, sectoral and nationality distribution of international bank lending for end-1998, together with summary tables covering earlier reporting periods. The statistics are available on the BIS website (www.bis.org) and will be reproduced in the statistical annex of the June 1999 issue of the BIS Quarterly Review, to be released on 14 June 1999(1) The BIS international banking data are also included in the joint BIS-IMF-OECD-World Bank quarterly statistical release on external debt, which has recently been introduced in order to facilitate timely access to a single set of debt indicators drawn mostly from creditor and market sources(2)
The latest BIS consolidated statistics suggest that hardly any region in the developing world was spared from the flight to safety and liquidity which followed the Russian debt moratorium in August 1998. Thus, while international banks continued to withdraw from the emerging economies of Asia in the second half of 1998 (-$28 billion), they simultaneously trimmed their claims on eastern Europe (-$17 billion) and Latin America (-$8 billion). However, contagion during this period was not as severe as these data might suggest. First, the retrenchment from Asia was halved compared with the first half of 1998, confirming evidence from other sources of an easing of financing pressure in the region. Second, the pullback from Latin America was more than accounted for by Brazil (-$12 billion), partly offset by a further rise in exposure elsewhere on the continent. Third, banks' apparent retreat from eastern Europe reflected developments vis-à-vis Russia, which concealed the continuing ability of other major borrowers in the area to attract banking funds. Finally, although some African countries appear to have suffered from the general aversion to risk, banking business in the Middle East continued to thrive. These developments add weight to reports of a greater willingness among lenders to differentiate between emerging market borrowers and to provide financing at spreads deemed more commensurate with risks.
The maturity composition of bank claims on emerging market and transition countries shows a general decline in the share of the short-term (up to one year) category. The movement was particularly pronounced in eastern Europe (-8 percentage points, to 36%) and Latin America (-3 percentage points, to 52%). While this chiefly reflected in the former case losses in the dollar value of exposures to Russia, especially in holdings of short-term government securities, in Latin America it was mainly due to banks' non-renewal of credit to Brazil. Active policies of securing longer-term financing also entailed a lengthening of the maturity profile in a number of other major borrowing countries in these two regions (particularly Argentina and Hungary). Meanwhile, the share of the short-term category in claims on Asia showed signs of stabilising (at 53%), following a sharp fall in the first half of the year. However, there were marked divergences between individual countries. Thus, whereas non-renewal of short-term credit to Malaysia led to a 4 percentage point shift away from the short-term band (whose weight in the stock outstanding declined to 44%), greater reliance on short-term loans by China raised their proportion of the total by 2 percentage points (to 54%).
Looking at the sectoral composition of claims, the main effect of the withdrawal from Asian emerging markets was to further reduce the role of domestic banks in the channelling of international banking funds to the local economies. Their share in the total claims of BIS reporting banks on the region fell by 2 percentage points in the second half of 1998 to a low of 35% at end-year, resulting in a corresponding increase in that of the non-bank private sector (to 56%). Banks in South Korea and Thailand bore the brunt of this adjustment. In Thailand, the weight of the local banking system in such exposure was cut to 22%, compared with 53% in Korea. In Latin America, the retreat from Brazil had a similar impact on claims on local banks (-2 percentage points, to 29%), but the counterpart to this was an increase in the proportion held vis-à-vis the public sector. Interestingly, the new credits extended to neighbouring countries involved primarily the public sector, which also accentuated the shift away from interbank business(3) In contrast, the steep markdown of claims on Russia was mostly accounted for by the public sector and the non-bank private sector, with domestic banks in fact raising their share from 51% to 63%. At the same time, the new funds extended to the other major eastern European countries were mainly channelled to local banks, which also further tilted the overall balance towards interbank exposure.
With respect to the nationality composition of claims, the prevalent trend of the last few years has been the growing predominance of European banks. Indeed, their combined share of emerging market claims rose even as the worst of the crisis hit global markets in the second half of 1998. The largest increase in their weight was recorded vis-à-vis eastern Europe (from 80% to 85%). While the default on Russian treasury bills had a strong impact on the positions reported by North American banks, the large proportion of officially supported long-term credits in German banks' exposure to Russia alleviated the impact of the Russian decision on the combined book of European lenders. As a result, the share of German banks in the total reported claims on the country rose from 41% to 53% in the period under review, masking sizable valuation losses for other European banking groups. Japanese banks continued to lead the retrenchment from emerging economies in Asia, with their share reaching a 14-year low of 29%. In Latin America the general retreat of reporting banks from Brazil was mitigated by more active lending by US, German and Spanish banks to other major countries in the region.
1For related conceptual and statistical issues, see International Banking and Financial Market Developments, August 1998.
2The statistics are available at: www.bis.org/publ/r_db9901.htm, and can also be accessed via each organisation's own website.
3However, foreign acquisition of local banks may also have contributed to reducing interbank positions, as a result of consolidation and, therefore, a possible reclassification of assets from international to domestic.