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US banks cut foreign exposure by $300B in Q4'19

U.S. bank international exposure fell 7.3% quarter over quarter to $3.804 trillion at the end of 2019, and non-U.S. claims represented 22.0% of total exposure for U.S. banks, down 1.4 percentage points from the previous quarter.

Banks reported the largest combined exposure to the U.K., at $525.06 billion, down 5.3% from Sept. 30, 2019. Japan replaced the Cayman Islands at No. 2 with $417.87 billion in exposure at the end of the year. U.S. bank exposure to the Cayman Islands dropped 19.4%, or roughly $100 billion.

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U.S. banks reported a quarterly decrease in exposure to 15 of the 20 largest markets where the industry had at least $50 billion of exposure.

Only banks with cross-border exposure exceeding 1% of total assets or 20% of total capital are required to publicly disclose exposure to any particular country.

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Citigroup Inc., one of the most internationally focused U.S. banks, reported $806.98 billion of exposure to 18 non-U.S. markets, down from $851.32 billion at the end of the third quarter.

Citi's total exposure to Germany, France, Italy and China — all hotspots in the coronavirus epidemic — fell 9.2% quarter over quarter to $150.68 billion. Among the four, only Citi's exposure to China grew during the quarter, by 2.3%.

During a March 11 conference call, CFO Mark Mason said a variety of issues are impacting the company's business in Asia, including concerns about trade, unrest in Hong Kong, rate cuts and now the coronavirus. Mason said Asia accounted for roughly 20% of the company's revenue, and China, Hong Kong, Japan and Korea alone accounted for 8%.

"So certain sectors like hospitality and travel, we've seen the impact of that already. On the flip side, we've also seen a flight to quality as it relates to deposits," Mason said, according to a transcript.

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