Loans to Emerging Markets Jumped Most on Record, BIS Report Says

Banks increased lending in developing nations by the most on record in the first quarter, helping to double the share of interbank loans going to emerging markets, the Bank for International Settlements said.

Foreign lending to developing nations rose 8.4 percent, or $267 billion, in the three months ended March 31 from the quarter before, the Basel, Switzerland-based institution said in its quarterly report released today. Loans in Brazil, China and Russia contributed 85 percent to the growth, according to banks reporting to BIS. Cross-border credit to developed nations fell 1.5 percent.

The increase marks first time since the second quarter of 2011 that euro-area banks boosted lending to emerging markets, according to BIS, citing a pick up in credit activity from lenders in France, the Netherlands, Germany and Luxembourg. Banks’ credit to residents of the euro region was flat year on year in the first quarter and declined 0.1 percent in the second, figures from the European Central Bank show.

“Especially in emerging Asia and Latin America, countries generally have been affected less by the global financial crisis,” the BIS, a record-keeper of the world’s central banks, said.

Emerging markets’ share of international interbank loans doubled to 14 percent in the past five years, the data show. Lending to developing-nation banks surged 12 percent, compared with a drop of 2.4 percent to those in advanced countries, the BIS said. Emerging-nation banks increased assets by a weighted average of 47 percent from 2009 to 2012, outpacing the 7.6 percent expansion for developed-world lenders, it said.

To contact the reporter on this story: Zahra Hankir in London at zhankir@bloomberg.net

To contact the editor responsible for this story: Gavin Serkin at gserkin@bloomberg.net

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