15 December 2010

Detailed exposure of banks to PIGS countries

he BIS latest publication provides interesting details which are usually kept away from public eyes; I talked to the BIS which confirms that they were able to publish these detailed data following an authorization from Central Banks in Europe. I guess this disclosure had only one objective: to show that Spanish banks gross commitment to banks and public sector in Portugal, Greece and Ireland is minimal at USD 19.2 billion vs a total exposure of USD 98.3 billion, i.e. 20%.
These statistics also confirm my previous analysis of a very low exposure of Italian banks to PIGS countries at USD 76.3 billion, 5.4 X less than France and 6.7X less than Germany. This number is even lower if exposure to banks and public sector only is considered (7X less than France and 9X less than Germany). France and Germany have a total exposure to PIGS of USD 410 billion and USD 512 billion respectively, nice numbers which explains a lot about the Greek and Irish rescues...
The bar charts show that banks have substantially reduced their exposure to the PIGS countries during Q2 2010, even if unevenly (Germany for example cut 25% of its exposure to the non-bank private sector in Ireland whilst increasing it by 5% to banks). I have no doubt that this has continued since, with all the sovereign debt reduction flowing to the ECB balance sheet.

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