Overseas Lending by U.S. Banks Slips

U.S. bank loans to overseas borrowers fell in the first three months of this year as lenders slashed their exposure to Japan by almost a quarter, even as that nation’s economy surged, a Federal Reserve survey shows. Overseas governments, banks, corporations and individuals had $503.48 billion in outstanding loans from U.S. banks in the January-March period, down from $516.34 billion in the last quarter of 1998. While Japan’s gross domestic product grew a stronger-than-expected 1.9% in the first three months, many analysts said U.S. banks are unconvinced that the economy has fully rebounded. U.S. bank loans to Japan, Germany and the four other largest economies outside the U.S. fell a combined 6%. Bank loans to Asia fell 1%, and lending to Latin America was little changed, even though Brazil’s decision to devalue its currency in January shook markets worldwide. Japan had $39.14 billion in first-quarter outstanding loans from U.S. banks, down 24% from $51.74 billion in the fourth quarter, according to the quarterly survey of 108 banks.