Tags: bis | lending | france | germany | banks

BIS: Lending to French, German Banks Fell in 1st Qtr

Sunday, 18 Sep 2011 03:49 PM

International lending to euro-area banks fell in the first quarter, driven by a decline in foreign credit to French and German lenders, the Bank for International Settlements said.

International banks reporting to BIS reduced their cross-border lending to euro-area banks by 3.1 percent, or $69 billion, in the first three months of the year, it said in its quarterly report released Sunday.

The decline was driven by a 5 percent drop in debt provided to French banks and a 5.4 percent decline in loans to German banks, Basel-based BIS said. The numbers are adjusted for exchange rate changes. Lending to Spanish and Irish banks contracted by 10 percent and 13 percent, respectively, according to the report.

The Euribor-OIS spread, a gauge of banks’ reluctance to lend to each other in Europe, has risen since it hit a low of 13.7 basis points during the first quarter. It stood at 77.2 basis points on Sept. 16 in London. The index measures the difference between the three-month euro interbank offered rate and overnight index swaps. It had reached 84.6 on Sept. 12, the highest level since March 2009.

The BIS records cross-border lending by banks reporting to it in 30 countries, including all major developed economies. It is due to report provisional second-quarter data Oct. 20.

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