Global Interbank Lending Fell to Record Low in 2012, BIS Reports

Banks were more reluctant than ever to lend to peers abroad last year, driving cross-border interbank loans as a share of total credit to a historical low, the Bank for International Settlements said.

Cross-border lending of banks reporting to the BIS fell by $345 billion, or 1.2 percent, to $29.3 trillion in the final quarter of 2012, bringing the decline for the year to 1.9 percent, the Basel, Switzerland-based institution said today. The drop was caused by a 5.2 percent reduction in lending to banks based in the euro area, as well as by shrinking lending to U.K. and U.S. banks, the BIS said. Interbank lending as a share of all cross-border lending fell to a record 38 percent.