FIRST TIME SINCE 2016: Cross-border lending to EMs sinks


    LONDON- Cross-border lending to emerging markets fell in the second quarter for the first time since 2016, mainly driven by a decline of $43 billion in Latin America and the Caribbean, the Bank for International Settlements (BIS) said on Tuesday.

    The BIS, a forum for the world’s central banks, said in a quarterly report analyzing banking statistics that the contraction in emerging markets and developing economies (EMDEs) had been relatively widespread.

    Claims — transactions between banks and counterparties across borders — declined year-on-year for three of four regions, resulting in negative growth for EMDEs as a whole for the first time since 2016, the BIS report found.

    “One exception to this general picture is the Africa and Middle East region: the annual growth in cross-border claims on its residents has remained positive (+4 percent yoy), extending the trend obser ved since 2014,” the report said.

    The economic impact of the coronavirus pandemic has roiled global markets and hit many emerging e conomies particularly hard. Latin America is the worst-affected region, with about 27 percent of total COVID-19 cases, followed by Asia, North America and Europe, according to a Reuters analysis.

    On a global level, banks’ crossborder claims shrunk by $1.1 trillion in the second quarter compared with the first.

    Year-on-year growth in claims halved to 5 percent at the end of June from 10 percent at the end of March. A decline in interbank lending drove the overall contraction.