U.S. banks have slashed their exposure to Asian emerging markets this year, while upping the ante in other developing regions, according to a report.
Data compiled by Brown Brothers, Harriman & Co., a New York investment bank, show that cross-border exposure among U.S. banks in Asian emerging market countries excluding Taiwan was $41.3 billion at the end of the first quarter, a 22% drop from the fourth quarter of 1997.
But cross-border lending and other credits extended to Latin America rose 3%, to $89.3 billion, at March 31.
Cross-border exposure to southern and Eastern Europe increased 16%, to $15.3 billion. Exposure to Africa jumped 11%, to $7.5 billion.
Total cross-border lending to emerging market countries fell, however, by 4%, to $163.4 billion.
The figures are based on information supplied by the Federal Financial Institutions Examination Council, a regulatory agency that tracks credit extended to foreign borrowers by U.S. banks.
They do not include loans and other credits extended by U.S. banks from overseas offices. Including both cross-border and local credits, U.S. banks had $247.4 billion in exposure to emerging markets as of March 31, just slightly more than the $247.1 billion as of yearend 1997.
As of March 31, six money-center banks-BankAmerica Corp., Bankers Trust Corp., Chase Manhattan Corp., Citicorp, First Chicago Corp., and J.P. Morgan & Co.-accounted for $192.4 billion in cross-border and local-country exposure in Asia.
Six other major banks-Bank of New York Co., BankBoston Corp., First Union Corp., NationsBank Corp., Republic New York Corp., and State Street Corp.-held a combined $34.8 billion.
U.S. banks continued to sharply reduce their lending to Asian countries through the second quarter. At Chase Manhattan Corp., exposure to Indonesia, South Korea, and Thailand fell 17% from the first to the second quarter, to $6.2 billion as of June 30.
At First Chicago Corp., cross-border outstandings in South Korea, Indonesia, and Thailand declined 33%, from $1.5 billion as of Jan. 31 to $1.0 billion as of June 30. At Morgan, exposure to Asian emerging market countries dropped 26% over the second quarter to $3.4 billion, down 44% from yearend 1997. And at Bankers Trust, exposure to South Korea, Indonesia, and Thailand fell from $3.5 billion at yearend to $2.5 billion at the end of June.
Raphael Soifer, a bank analyst at Brown Brothers Harriman, noted that the figures reported to U.S. regulators far exceed those disclosed to shareholders.
Of the $192.4 billion reported by the six money-center banks for Asian exposure, for example, only $78.3 billion, or 41%, was disclosed to shareholders, the analyst noted.
"As in past years, the banks' quarterly disclosure deteriorated significantly even from that at yearend, which, in many cases, wasn't very good anyway," Mr. Soifer said.
