After two years of grinding crisis in Europe, lending by foreign institutions in the U.S. appears unfazed.

Many institutions on the Continent have been cut off by private funding markets, and many others have had access sharply curtailed, producing a radical reconfiguration of the liability profile of their operations in this country.

On the asset side of the balance sheet, however, the most pronounced fluctuations have been in cash holdings, the majority of which appears to be parked at the Federal Reserve, earning a yield of 25 basis points.

Lending, meanwhile, has been relatively stable, dipping through the recession and recovering steadily since early 2010.

U.S. operations of foreign institutions (domestic branches and agencies of foreign banks and Edge Act corporations) have traditionally relied heavily on wholesale, large-balance time deposits, which funded roughly 50% to 85% of their assets from 2008 to 2010. (The data here excludes chartered banks owned by foreign parents, like Compass Bank, an Alabama unit of Spain’s Banco Bilbao Vizcaya Argentaria.)

Such deposits have withered as the sovereign debt and banking crisis in Europe has boiled on, plummeting 30% from May 2011 to $720 billion in early June. In their stead, parent companies have been funneling in cash from offices outside the country. Such amounts totaled $272 billion in early June, whereas the U.S. operations of foreign institutions had exported $275 billion to $450 billion to offices outside the country during calmer periods in late 2009 and 2010.

Throughout the deposit exodus, however, lending by the foreign group has been climbing, increasing 15% from May 2011 to $642 billion in early June. Commercial and industrial lending by the sector increased 7% during the same time to $253 billion.

Cash levels have been where the action is, soaring in the first half of 2011, dropping as deposits fled, and recovering as injections from offices outside the country continued to build. (The data here includes operations controlled by entities outside Europe, but institutions in the currency bloc accounted for about a third of assets in the sector at yearend.)

In a June report, Joseph Abate, a money market analyst at Barclays Capital, estimated that more than 90% of the cash is held at the Fed. Such a position would mirror the large stockpiles of funds booked at the European Central Bank, a phenomenon widely taken as a sign of banks’ reluctance to lend to one another.

The upheaval in Europe has prompted its banks to shed loans. Wells Fargo has been an active acquirer of portfolios, for instance, and Oriental Financial Group agreed to buy BBVA’s bank in Puerto Rico in June. And European banks in particular remain vulnerable to edgy funding markets, despite their apparent ability to support U.S. operations.

So far, however, U.S. borrowers appear to have been spared major disruptions within a sector that accounts for about 10% of commercial bank lending in the country.

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