Cross-border bank lending among developed nations dropped sharply in the last three months of 2010 on the steepest decline in eurozone bank lending on record, according to Financial Times. On Friday, the Bank of International Settlements reported that lending to banks in industrialized nations fell by $575 billion in the fourth quarter of last year, of which banks in the eurozone accounted for $422 billion. The drop came as amid mounting concerns about the economic stability of debt-burdened economies on the periphery of the eurozone.
Outsanding foreign claims on banks in Ireland, Spain, Greece, and Portugal fell by about $101 billion, $90 billion, $25 billion, and $21 billion, respectively, from the level recorded in the third quarter. The BIS did not offer an explanations for the sharp drop, but said that foreign exchange values have been fairly steady and the currency movements were likely not related to the large decline in lending. The U.K. also saw a $126 billion drop in foreign claims, while U.S. banks reported a drop of $80 billion during that time.