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Monday, April 16, 2012

Which Euro Banks Are Most Exposed to PIIGS Debt Woes ?

Distilling information which the European Banking
Authority (EBA) published in July 2011 after stress-testing
91 banks, financial blogger Katchum offers these conclusions :
The exposure to Spain primarily came from the Spanish banks themselves...  BBVA [ Banco Bilbao Argentaria ], Banco Santander (STD), La Caixa, BFA-Bankia, Banco Popular Espanol. What is striking here is that on average, all of these Spanish banks had exposure greater than their equity [emphasis mine]. This means that a government default would have significant consequences for the solvency of these Spanish banks. Also note that Barclays (BCS) has significant exposure to Spanish debt. It is advisable not to have these banks in your portfolio during a debt collapse in Spain.
Commerzbank [Germany] is exposed to Spain, Greece and Italy. In total, it has 24 billion USD exposure to the PIIGS, while it has a book value of 31 billion USD (77%). In a worst case scenario, Commerzbank will be almost insolvent.
BNP [BNP Paribas, France] has exposure to Spain, Portugal and Italy. It has 46 billion USD exposure to the PIIGS in total, while it has a book value of 96 billion USD. The exposure to the PIIGS is very significant (50%), especially due to its exposure to Italy.
Credit Agricole [France] is another bank that pops up regularly. Credit Agricole has exposure to Spain, Portugal and Italy. It has 21 billion USD exposure to the PIIGS, while it has a book value of 54 billion USD. The PIIGS exposure is very significant (40%) compared to its book value.
Barclays [U.K.] is the last in the list and has exposure to Spain, Portugal and Italy. In total it has 26 billion USD exposure to the PIIGS, while it has a book value of 84 billion USD. This exposure is significant (30%).
For the relative size and importance of the aforementioned institutions, check out BankDaily.com's 'Top Banks and Banking Groups in Europe, Ranked by Total Assets'. 

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