(By Alice Baghdjian)
Ravaged by the financial crisis and struggling with new capital regulations, European banks have scaled back overseas assets and slimmed loan books.
Cordiant Capital, a fund focused on private loans to emerging markets, cites data this week from the Bank for International Settlements (BIS), which shows that syndicated loans to emerging economies fell by 30 percent to $245.3 billion in the year to end-September.
That’s down from $353 billion in the comparable 2011 period.
New loans to Asia, normally the largest recipient of developed market bank lending, fell by 27 percent over the last 12 months compared with the same period in 2010-2011.
But it was lending to emerging eastern European economies that fell most markedly, cut by more than a third.
Deleveraging accounted for as much 0.8 percent of eastern European GDP in the second quarter of 2012, a separate study showed last month. This deleveraging could spell trouble for emerging mid-cap to large companies across the globe, reckons David Creighton, President and CEO of Cordiant.
These companies, unlike their larger peers, won’t be able to ride out the cuts in lending on the recent wave of bond issuance in emerging markets, and will remain reliant on international bank loans, Creighton says.