EUROPE'S troubled banks accelerated efforts to pull loans from countries around the world, including Australia, towards the end of last year as the euro zone debt crisis intensified.
Figures released by the Bank for International Settlements in Switzerland show Europe's banks cut more than $US8 billion ($7.56 billion) worth from the Australian economy as they began feeling the funding squeeze at home.
During the second half of last year, most European banks began selling down their international loan portfolio or simply turning off the lending tap, the BIS said.
Advertisement: Story continues below
This coincided with a period in which many large Australian companies were attempting to refinance loans they had locked in during the global financial crisis.
''Pressures on European banks to deleverage increased towards the end of 2011 as funding strains intensified and regulators imposed new [capital] targets,'' the BIS said in its March quarterly review, released this morning. However, the report found it was largely an orderly exit by European banks and other global banks and bond markets were able to step in to replace financing. This helped Australian businesses avoid a credit squeeze.
Read more at Brisbanetimes.com.au