Friday, October 23, 2009

Global Loans, Credits, and Cash Flows Continue to Drop, Except Brazil, Singapore, Germany

The Bank of International Settlements revealed that the loans, credits and cash flows of the international financial system in the second quarter continued to fall, albeit a smaller pace. Some countries, however, experienced growth, such as Singapore and Brazil.


Brazil registered the highest growth of international credit lines among all emerging markets, second only to Singapore, and is the seventh largest in the world. The rise of foreign loans was $11.5B between April and June. Almost half of the increase in loans in Brazil ($ 5.7B) was for industries outside the banking sector. This same segment had suffered in the last quarter of 2008 a decrease of $ 8.8 billion. The total exposure of foreign banks in the country rose from U.S. $ 140B in the first quarter to $ 153.7B at the end of June. This amount was still slightly below the levels of December 2008 ($155B), and in December 2007 ($157 billion).

Latin America.

Thanks to Brazil, the expansion of credit in Latin America reached $5.8B, after falling $20.5B in the first quarter and $44B in the last quarter of 2008. As Brazil expands its credit, Mexico, for example, continued to see a decrease of $3.9B.

Including all loans from foreign banks loans and exposure of banks increased even further from U.S. $273.6B in December 2008 to U.S. $284B in March and U.S. $331B in June, one third of all Latin American's total. Brazil has surpassed Mexico, which sum total loans of $318B.

European banks are the ones who bet on Brazil, with a total exposure of $246B in June. Individually, Spain is the largest, with $129B. U.S. banks totaled U.S. $51B.


Russia and India face problems There were declines in many markets. South Africa saw a redcution of more than a $19B in loan volume. In India, the loss was U.S. $ 4.6B, in Russia U.S. $ 1.1B. China and Korea had the most positive performance. The expansion of international credits to South Korea was U.S. $ 9.9B. In China, it was $ 7.5B.

Overall, international loans to emerging countries reached U.S. $ 2.3T in the second quarter, less than in December 2008, when the volume was $ 2.48T. Among the emerging countries, only Singapore has received more than Brazil, with $18B, thanks to its status as an offshore center.

Europe, U.S.

Overall, the exposure of banks to rich markets fell by $204.3B, for a total of $23T. Lines of credit in the rich countries to companies outside the banking sector has expanded by $87B. But the fall in interbank lending reached U.S. $ 291B. Earlier this year, the reduction had been $509B. The expansion of credit in Germany was $ 37.4B between the first and second quarter, totaling $1.7T.

In the United States, in turn, the fall was significant, $169B. The drought in the credits in the United States was higher than previous months. Still, the country's loans totaled $4.9T at the end of June.

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