U.S. banks cut back on lending to emerging markets in Asia before the regional financial crisis exploded, according to the Bank for International Settlements.
According to the international banking agency, U.S. banks reduced their exposure to Asia by 14%, or to $29.4 billion, at yearend 1997 from $34.2 billion a year earlier.
Japanese banks also reduced their exposure to other Asian countries, by 3% to $114.7 billion.
By contrast, Canadian and European banks increased their exposure to Asia by 10.5%, to $236.8 billion.
Analysts said that the sharp cutback was possible because of the large amount of short-term lending extended by U.S. banks in the region. But they also emphasized that data underscore how risk management lessons banks learned during the Latin American debt crisis of the 1980s helped U.S. banks reduce their exposure to potential problems overseas this time around.
"Latin America taught everybody a lesson," said Lawrence Cohn, a banking analyst with Ryan, Beck & Co.
As a result of the Latin American crisis, Mr. Cohn said, U.S. banks have also limited much of their exposure to short-term credits.
"There's a huge difference between the way U.S. banks lend and European and Japanese banks lend," Mr. Cohn observed.
"U.S. banks have much more short-term money market and derivatives- related exposure and much of that is self-liquidating."
Analysts also noted that Citicorp, the U.S. bank with the biggest exposure, was one of the quickest to curtail its activities.
"Citicorp really anticipated events before anyone else," said Arthur Soter, managing director for global banking and financial services at Morgan Stanley Dean Witter. "They capped and selectively reduced their exposure in several countries."
In its report, the settlements bank acknowledged that its most recent data may mask the full extent of the ongoing pullout from Asia, much of which may have occurred after the yearend reporting period.
But it also noted that there were clear differences in strategy among U.S., Japanese, and other foreign banks as the Asian crisis unrolled.
"Whereas Japanese and North American banks reduced their outstanding claims on emerging economies in Asia, their European counterparts continued to increase their presence in the region, albeit more selectively," the report noted.
Asia was also not the only region where U.S. banks cut back on their cross-border exposure. Lending to Latin America, another emerging market region, fell 4.8%, to $63.3 billion.
However, lending to the Middle East rose 33%, to $5 billion, and lending to Eastern Europe rose 13%, to $10.5 billion.