The Bank of International Settlements in Basel
(Reuters) - Overseas lending to euro zone countries fell in the first quarter of this year amid worries about the health of Greece and other peripheral countries, in contrast to a rebound in bank lending across the rest of the world.
Lending to euro zone countries dipped by $77 billion, or 0.4 percent, in the January-March quarter, according to Bank for International Settlements (BIS) data released on Tuesday.
That was less severe that the $423 billion slump in lending to euro zone countries in the final quarter of 2010 and was in contrast to renewed appetite to lend to the rest of the world at the start of this year.
Global lending rose by $466 billion or 1.5 percent in the first quarter, to retrace a contraction seen in lending in the previous quarter.
Global financial markets have been hit by renewed worries about the health of the euro zone since March, however, and euro zone leaders were last week forced to rescue Greece in an attempt to prevent market instability from spreading through the region.
Banks typically cut loans to countries at times of concern to limit their exposure in the event of a sovereign debt restructuring or a rise in bad loans as economies deteriorate.
BIS statistics, the only ones to chart cross-border lending around the world, showed foreign banks had $138 billion of loans to Greece at the end of March on an ultimate risk basis, including $45 billion of sovereign debt.
Overseas banks had $726 billion of exposure to Spain, including $109 billion of sovereign debt, and $912 billion of exposure to Italy, including $282 of sovereign bonds.
Lending to Greece last year fell by one-third and lending to Ireland and Spain contracted by a quarter.
BIS statistics underscore how interconnected European countries are. The risk that problems could spread across peripheral countries has been at the heart of the euro zone jitters for over a year.