Britain’s banks have shrunk their lending exposure to peripheral eurozone counterparts by a quarter in just three months as concern deepens about the intensifying crisis on the continent.
According to data compiled by the FT, the big four UK banks cut interbank loan volumes by more than 24 per cent to £10.5bn in the three months to the end of September, reflecting a sharp increase in nervousness towards lenders across the southern eurozone. The biggest reductions were in loans to Greek and Spanish banks, continuing an earlier pattern, but an Italian loan slump was new.
HSBC, the biggest supplier of credit to other banks, cut its exposures the most sharply with a 40 per cent overall decline in interbank loans to the region. It eliminated lending to Greek banks, and cut volumes in Spain and Ireland by about two-thirds.