Foreign bank loans to Australia fell by US$32 billion in the December 2011 quarter, unwinding the net increase in foreign bank lending over the preceding nine months of last year, data compiled by the Bank for International Settlements shows.The BIS said that in developed countries, as a whole, total cross-border lending to banks and non-banks contracted by US$630 billion. A level, it said, that was the "largest decline in aggregate cross-border claims since the drop in the fourth quarter of 2008, which followed the collapse of Lehman Brothers."In emerging market economies, the BIS said that cross-border claims fell in most regions, and fell by US$75 billion overall. The decline was concentrated in Asia-Pacific in general and in banks in China in particular.For China, this was the first overall decrease since the first quarter of 2009, the BIS said.The data, while comprehensive, is pretty stale in the context of the current stress in public finances and in much of the banking sector in Europe.One commentator, Sean Keane of Triple T Consulting, wrote yesterday, in his regular circular, that cross-border lending to corporates was also reduced according to the BIS, but by a much smaller amount than lending to other banks."For the market", Keane wrote, the BIS data is "ancient history, confirming in more detail what we roughly knew happened in Q4 last year. "What the market is more interested in is what happened in Q2 [of 2012] and what will happen in Q3 of this year. "In all likelihood the trends that were seen in Q4 2011 have continued to play out, and interbank lending appetite in particular will have continued to shrink. "Until banks with reasonable balance sheets have some confidence that there is a unified and agreed approach to supporting the euro-zone banks, they will continue to withhold interbank loans, and recycle their cash surpluses into AAA government bonds and bills, and into overnight deposits with their central banks. "This doesn't mean that the less well funded euro-zone banks will fail, it simply means that their reliance on the liquidity provided by the ECB and their National Central Banks will continue. "The central banks will keep these banks alive, though they are really just going through the motions each day, with their primary objective being to hold on to depositor funds, and to gradually work off their bad debts, and rebuild from a much lower level."