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Banks Cut Cross-Border Lending

BIS says decline in fourth quarter was sharpest since Lehmans collapse.

By Boris Groendahl and Gavin Finch, Bloomberg | Updated on June 04, 2012

Global banks scaled back cross-border lending to companies, governments and each other at the fastest rate since 2008 in the final quarter of last year, with lenders based in the euro area leading the way.

Lenders reporting to the Bank for International Settlements, the record-keeper of the world’s central banks, shrank their cross-border assets by $799 billion, or 2.5 percent, in the three months ended Dec. 31, data released by the BIS show. The decline was the sharpest since the fourth quarter of 2008, when interbank lending markets froze worldwide following the collapse of Lehman Brothers Holdings Inc.

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