European banks withdraw business loans down under

People who do not think that Australia is affected by the economic turmoil in other parts of the world have been given a rude awakening.

The Switzerland-based Bank of International Settlements (BIS) has revealed that lenders in struggling European nations pulled more than $7.56 billion worth of loans out of Australia towards the end of 2011.

This could have been disastrous for business banking customers down under, as many corporations had taken out loans or were in the process of refinancing in 2011.

It seems that the well documented turmoil in the eurozone spooked many banks, causing them to quickly reassess their international loan portfolio.

"Pressures on European banks to deleverage increased towards the end of 2011 as funding strains intensified and regulators imposed new [capital] targets," BIS said in its March quarterly review.

Luckily for companies in Australia, enough global banks were on hand to pick up the slack left by the Europeans and Aussie firms are also finding a greater number of options open to them, as the likes of ING Direct have unveiled plans to enter the business banking sector for the first time.

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