BIS consolidated international banking statistics for end-December 1999

The BIS is releasing today its consolidated statistics on the maturity, sectoral and nationality distribution of international bank lending for end-December 1999. The statistics are available on the BIS website (www.bis.org/publ) and they will be reproduced in the statistical annex of the BIS Quarterly Review: "International Banking and Financial Market Developments", to be released on 19 June 2000. The BIS international banking data are also included in the joint BIS-IMF-OECD-World Bank quarterly statistical release on external debt (www.bis.org/publ/r_db9911.htm).

Latest consolidated statistics for end-December 1999 indicate that overall exposures of BIS reporting banks rose marginally from mid-year (1%). Increased international bank lending to the developed world offset reduced claims on offshore centres and emerging markets. The cutback in claims on developing countries was most pronounced in Asia (-$16 billion) and international banks' outstanding exposure to this region is now lower than to Latin America for the first time in seven years. The most recent data on an ultimate risk basis reveal that exposures to offshore centres at end-1999 were 25% lower than indicated by total claims on the region, highlighting the importance of foreign branch activity. (1) Risk-adjusted claims on emerging markets (including eastern Europe) were 8% lower.

Consolidated claims on Latin American countries fell by 6% year-on-year although international banks increasingly relied on guarantees, as shown by the rise in negative transfers to ultimate risk. On a risk-adjusted basis, BIS reporting bank exposures are 11% lower than that implied by total claims on the region. Argentina was the only major borrower to receive new credits since Brazil faced a currency crisis at end-1998. Indeed, claims on Argentina are at a historical high and increasingly of longer maturity. In contrast, commercial banks' retrenchment from Brazil stabilised in the most recent period, although overall exposures are 27% lower than in mid-1998. All major Latin American borrowers lengthened their average maturities largely by reducing their short-term claims. As in other emerging markets, the sectoral distribution of claims on Latin America reveals a general decline in interbank transactions and an increasing share of credit to the non-bank private sector. In particular, Chile stands out with claims on the non-bank private sector accounting for 84% of total outstanding claims, compared with 32% at mid-1992. US banks remain the most highly exposed to the region (22% of total claims) and, together with Spanish and German banks, account for one half of total claims. US banks tended to rely more on guarantees, with 23% of claims on Latin America reallocated elsewhere, while Spanish and German banks' exposures were 11% and 9% lower respectively on a risk-adjusted basis.

BIS reporting bank exposures to Asia have fallen by about 30% since the peak of $391 billion reached in mid-1997, with Korea, Thailand and Indonesia accounting for most of this decline. The drop in overall claims must be seen in the context of Asia's cumulative current account surpluses and a reflow of foreign portfolio and direct investment, which have largely obviated the need for bank lending. A reallocation of claims on an ultimate risk basis reduced overall exposures to Asia by 5% at end-1999, the least for any other emerging market group implying that guarantees are less of a factor in lending to this region. A striking development following the crisis in the region's banking sector has been the pronounced shift away from interbank lending in favour of lending to the public and non-bank private sectors. The share of international bank claims on Asian banks fell from 44% at mid-1997 to 30% at end-1999. A look at the maturity distribution of claims reveals that, in contrast to other major Asian borrowers, Korea and India experienced a rise in the proportion of short-term credit. Korea's short-term claims rose from 45% in mid-1998 to 58% at end-1999. As claims are allocated on the basis of remaining (rather than original) maturities, this can be mostly attributed to longer-term claims coming due rather than a resumption of short-term lending. India, on the other hand, has seen a general rise in borrowing from reporting banks over the same period, at both the short and the long end of the maturity spectrum. Japanese banks continue to retrench from Asia, with exposures dropping from a peak of 48% at end-1988 to less than a quarter of total claims. Therefore, European banks appear to be gaining a larger share of a shrinking pie.

While overall claims on the Middle East and Africa have remained flat for the year, exposures to the region have nevertheless risen by 16% since end-1997, making it the only developing area to receive new bank credit. Over half of this rise is due to an increase in claims on Middle East oil producers, with the bulk of new funds being channelled to Saudi Arabia. In particular, international banks have been lending directly to the Saudi non-bank private sector, with such exposures rising from 41% in mid-1998 to 54% at end-1999, a historical high. European banks continue to account for most of the credit supplied to the region. However, US banks have increased their market share in the latest period.

BIS reporting bank exposures to eastern Europe stabilised in the second half of 1999 after falling sharply in the year following the Russian debt moratorium. On an ultimate risk basis, exposures to eastern Europe at end-1999 were 8% lower than that implied by total claims, mainly due to a reallocation of Polish claims. Commercial banks continued to retreat from Russia ($48.1 billion), as overall exposures to the country dropped to their lowest level since end-1994. This decline was largely due to a drop in short-term lending, with a lengthening in maturity profile possibly reflecting debt restructuring. In contrast, a general lengthening in average maturities of Hungarian and Polish debt is a sign of increasing confidence in these economies. A sector breakdown of BIS reporting banks' exposures to the region indicates a decline in bank intermediation in favour of direct lending to the non-bank private sector. Furthermore, European banks now account for a record 84% of the exposures to eastern Europe, with German banks the most heavily exposed to the region (43%). Meanwhile, US banks continue to retrench, mainly from Russia.

1 Data on ultimate risk attempt to provide a more accurate picture of BIS banks' exposures by reallocating claims with guarantees from the country of the immediate borrower to the residence of the guarantor. Guarantees may be explicit or implicit, as in the case of a head office being accountable for the activities of its legally dependent branches. Unless otherwise specified, the term "guaranteed claims" will refer to both explicit and implicit guarantees for the remainder of the text. Currently, 13 of 18 BIS reporting countries provide data on an ultimate risk basis. Hence the figures quoted in the text and accompanying tables underestimate the true extent of the reallocation of claims.