London: Bank lending to borrowers in emerging economies surged in 2007 despite a global credit crunch, with record growth in Asia-Pacific, Africa and the Middle East, according to a study carried out by Basel based Bank of International Settlements (BIS).
Findings indicated that cross-border bank credit to emerging economies had risen to $2.6 trillion at the end of last year, accounting for 7% of total claims and that growth was driven by record credit expansion in Asia-Pacific, Africa and the Middle East.
Banks, primarily in the euro area and the UK, channelled a combined $23 billion to borrowers in the United Arab Emirates, $10 billion to those in Saudi Arabia and $6 billion to those in Kuwait.
At the same time, residents in the Middle East deposited significant amounts in offshore banks in Q4 2007, driving an overall net outflow from the region. Credit to residents in Asia-Pacific was “exceptionally strong”, said BIS, growing by $82 billion with Korea accounting for nearly half the increase.
Credit to borrowers in India and China rose by $18 billion and $9 billion respectively while cross-border claims on emerging European countries grew 42% to $899 billion.
Including onshore lending by foreign banks, credit to emerging markets expanded by $402 billion to stand at $4 trillion of total foreign claims.
“Across regions, foreign claims on emerging Europe and Asia-Pacific expanded the most, accounting for 44% and 24% respectively, of new credit to emerging markets,” BIS said.
Foreign claims on emerging Europe stood at $1.5 trillion and was booked primarily by Austrian, German and Italian banks.
Together, UK and U.S. banks booked 45% of foreign claims on Asian emerging markets and nearly 40% of new credit since mid-2007. UK banks alone accounted for as large a share in foreign claims on Africa and the Middle East while Spanish banks make up 36% of foreign claims in Latin America, BIS said.