Banks Further Reduce Soviet Debt Exposure
LONDON - Western and Japanese commercial banks have reduced their debt exposures to the Soviet Union by $8 billion so far this year, according to estimates by J.P. Morgan & Co., released here last week.
This rapid decline follows a reduction of $10.3 billion last year, the U.S. bank said in an analysis of the potential for a Soviet liquidity crisis.
Morgan estimated that Western banks now have as little as $18 billion outstanding in pure risk assets to the Soviets, down from the $37 billion estimate for the end of 1989.
U.S. Total Is Small
The exposures are mostly concentrated among German, French, and Italian banks. The exposure of U.S. banks is estimated at about $500 million.
The estimates are regarded as the first reliable and up-to-date calculations on the extent of the withdrawal by commercial banks from Soviet business. They follow the fragmentation of the Soviet system and the failed coup attempt last August, along with persistent concerns that Moscow may default.
The exposures are mostly concentrated among German, French, and Italian banks.
IBCA Ltd., a British rating agency, recently estimated U.S. banking exposure to be as low as $500 million.
Information Held Sparse
Morgan said there is still a lack of reliable information of the extent and seriousness of the Soviet liquidity crisis, which is hampering Western action to map appropriate assistance.
The most conservative estimate of Soviet external debt is about $68 billion.
This debt burden constitutes no more than 165% of exports, a substantially lower ratio than that of most countries with payment problems and even lower that that of some developed countries like Sweden, it said.
But debt repayments are bunching, and are likely to amount to as much as $11 billion this year, compared with $6 billion in 1990.
European bankers have pushed for a bridge loan from the Basle-based Bank for International Settlements, but U.S. officials are lobbying for a six-month to one-year delay in the repayment of principal to give the Soviets breathing room.
Pressure Likely to Ease
In 1992, several factors seem to point to an easing of payment pressures, including lower scheduled repayments according to the maturity profile of Soviet indebtedness.
"Furthermore, banks are likely to have already reduced their short-term exposure to a minimum of less than $2 billion, which should make further withdrawals highly unlikely," the Morgan study suggested.