LONDON, July 23 Lending to Ukraine and Russia by
international banks fell sharply in the first three months of
the year as tensions in the region escalated and currency falls
cut the value of loans, lending data showed.
Conflicts in the region intensified in the first three
months of the year, culminating in Russia's annexation of Crimea
in March, and the recent downing of a passenger aircraft in an
area of eastern Ukraine held by Russian-backed separatists has
led to western calls for stronger sanctions against Moscow.
Foreign loans to Russia fell 7 percent to $209 billion
compared with the previous three months, according to data
released on Wednesday by the Bank for International Settlements
(BIS), which tracks cross-border bank lending.
Lending to Ukraine dropped 14 percent to $22 billion.
BIS said much of the decline was due to the sharp
depreciation of the value of the ruble and Ukrainian hryvnia
against the U.S. dollar, which reduced the dollar value of loans
booked in local currencies.
Locational banking statistics on an exchange rate-adjusted
basis showed international loans to Russia fell by $300 million
in the quarter and dropped by $1.5 billion in Ukraine, BIS said.
The drop in the value of lending to Ukraine and Russia
bucked a sharp jump in cross-border bank lending globally in the
first three months of this year, BIS said.
Overseas bank lending jumped by $580 billion in the first
three months of the year, the biggest jump since late 2011 and
reversing a contraction in lending seen through 2013.
The biggest increase in lending was to borrowers in China,
where international lending rose to more than $1 trillion. There
were also increases in lending to the rest of Asia, Latin
America and Africa and the Middle East, BIS said.
Cross-border lending to emerging Europe fell by $14 billion,
however, marking the fourth consecutive quarterly fall. BIS said
the falls were biggest to borrowers in Turkey and Poland, by
about $5 billion each.
(Reporting by Steve Slater; Editing by Matt Scuffham and David