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International bank lending dropped again in the first quarter and shrank by over $6 trillion in the year to the end of March as the financial crisis restrained credit, according to Bank for International Settlements (BIS) data.
Lending contracted by $1.5 trillion in January-March at current exchange rates, or over 4 percent, the BIS said on Thursday.
The pace of decline did slow from the worst contraction for at least 30 years in the previous quarter, however, and much of the latest drop was due to currency moves.
The statistics — the only ones to chart cross-border lending around the world — show how banks have been cutting off funds to companies and other borrowers in spite of efforts by governments and central banks to unlock jammed credit markets.
Cross-border lending had slumped to $29.4 trillion at the end of March, down from $35.8 trillion at the end of March 2008, again distorted by the strength of the U.S. dollar.
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CNBC.com Credit Crunch |
At constant exchange rates, which strips out the depreciation of the euro and other currencies relative to the U.S. dollar, lending dropped by $700 billion in the first quarter and contracted by about $3.3 trillion over the past year, according to BIS, which is the coordinating body for the world's central banks.
International borrowing had been rising steadily in the three decades that BIS has kept tabs on it, as the global economy raced ahead, but has tumbled from its March 2008 peak.
Lending contracted by $1.9 trillion in the fourth quarter of last year, or 5.7 percent, at constant exchange rates, the biggest fall since BIS data began in 1977, as the global financial crisis deepened following the collapse of U.S. investment bank Lehman Brothers.
In January-March lending denominated in Japanese yen shrank by 15 percent. Interbank loans denominated in euros were down 3 percent and loans in U.S. dollar dipped by 2 percent, the BIS said.
Data is a real-time snapshot *Data is delayed at least 15 minutes