A pullback by Swiss and euro area banks from Asia-Pacific has been countered by an expansion of local banks, including Chinese and offshore centers, resulting in a continuous rise in international credit to the booming region, the Bank of International Settlements (NASDAQ:BIS) said.
Fears of a lack of funding in Asia-Pacific due to the retrenchment of European banks after the global financial crises and the euro area's debt crises thus never materialized.
"The composition of international credit to emerging market economies in Asia-Pacific has shifted significantly in recent years. While banks from the euro area and Switzerland have pulled back, banks in the region have largely filled the gap," said BIS, which tracks international bank lending.
Foreign lending to Asia Pacific rocketed by 41 percent, or $613 billion to total outstanding claims of $2.1 trillion by mid-June 2012 from mid-2008, just before the collapse of Lehman Brothers, BIS said in its December quarterly review.
This expansion is in stark contrast to a drop in international lending to emerging Europe of 14 percent, or $230 billion, and a more modest increase in lending to Latin America of 24 percent, or $254 billion, in the same period.
In Asia Pacific, the total claims of euro area banks shrank by an estimated 30 percent, or around $120 billion, between mid-2008 and mid-2012 and their share of foreign lending fell from 27 percent to 13 percent by mid-2012, BIS said.
The decline was mirrored by a rise in the share of lending by banks from other countries to 37 percent from 27 percent.
"These include banks headquartered in Asian offshore centres and Asia-Pacific countries that report in the BIS international banking statistics and also non-reporting banks, which most likely are predominantly Chinese," BIS said.
The estimated intraregional lending accounted for 36 percent of total international claims on emerging Asia-Pacific by mid-2012, up from an estimated 22 percent a few years ago.
The overall share of U.K., U.S. and Japanese banks of total foreign claims on Asia-Pacific was relatively stable since the start of the global financial crisis in 2008 at around 23 percent, 16 percent and 11 percent, respectively.
Incomplete data made it hard for BIS to pin down the exact origin of all lending to Asia-Pacific, but it includes a rise in foreign claims on that region by banks headquartered in Asian offshore centers (Hong Kong SAR and Singapore) to $225 billion by mid-2012 from $119 billion in mid-2008.
Banks headquartered in Asian countries that report to the BIS (Taiwan/Chinese Taipei, India and Malaysia) doubled their intraregional foreign claims to $111 billion while Australian banks' claims on the region have risen almost threefold since mid-2008, to $54 billion.
But BIS lending data also indicate rapid growth in cross-border credit provided by banks that are not headquartered in one of the BIS reporting countries and BIS said it is likely that banks headquartered in the region account for the bulk of these other claims.
Drawing on other sources, such as Bankscope, BIS found that the unconsolidated total assets of Chinese banks' foreign offices in Asia (excluding Singapore) grew by $135 billion, or 74 percent, from 2007 to 2011.
And based on data from Dealogic, BIS learned that Asian banks, including those from Hong Kong and Singapore, increased their syndicated loans to emerging Asia Pacific by 80 percent, or $223 billion, from 2007 to 2001. Asian banks' share of total signings rose to 64 percent from 53 percent.
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