Aussie banks lift global lending
(29 April 2013 – Australia) Australian banks lifted their lending to the troubled economies of Europe sharply in late 2012, as global recovery and domestic credit growth remained stagnant.
One source revealed a US$15.8 billion (A$15.3 billion) jump in locally based bank lending to European nations in the December quarter - taking exposure to the region to US$200 billion.
At the same time, lending to the sluggish US economy jumped by more than a quarter to US$100.9 billion.
The increase in lending to Europe, which occurred as financial markets rallied on growing hopes of a global economic recovery, is the biggest rise in Australian exposure to the region in at least three years.
The sharpest change in Australian banks' exposure to the Eurozone centred on Germany, where local banks' claims jumped to US$13.8 billion, from US$9.2 billion three months earlier.
Lending to the British economy rose by US$8.6 billion to US$157 billion, despite the British economy shrinking during the quarter.
Exposure to France and Ireland each rose by close to US$700 million, to US$7.6 billion and US$3.2 billion respectively.
While Australian banks appear more confident about overseas lending, the trend is at odds with a US$405 billion contraction in global inter-bank lending during the quarter.
The source said that instead of banks’ lending to each other, government borrowing drove credit market activity during the quarter.
''International banking activity in the fourth quarter of 2012 continued to be marked by divergent sectoral trends, as credit to bank and non-bank counterparties moved in opposite directions,'' the source added.
The rise in Australian lending to Europe, which also takes into account the activities of foreign-owned banks based here, comes after local banks' caution about lending in the Eurozone.
The bulk of Australian bank lending is to Western nations, but the big four lenders are eyeing Asia as a key source of growth, with domestic credit growth showing few signs of returning to the boom years before the financial crisis.
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