27th January 2012
For the first time this week there was considerable public talk at official levels that perhaps the Greek debt crisis was not soluble. Combining Greek sovereign debt with other Greek debt the total represents 252% of GDP. Greek sovereign debt alone is 166% of GDP.
Private creditors of the Greeks state could see no purpose in further writedowns to near zero and have walked away again from the talks. Their mood was not helped by the European Central Bank on the one hand urging them to write down more but at the same time saying it expected to be paid in full with no haircut. The IMF has said that it is not allowed to lend in the circumstances. Adding to the gloom is the revelation that Greece must pay back a €14.5bn loan in March or default.
The problem for banks exposed to Greece is not primarily about the absolute amounts but the proportion of equity. BPI from Portugal is a good example, while owed 'only' €500m this represents 29% of its equity capital and so is very serious. At the opposite end RBS is owed over €1bn but this represents less than 1% of its equity capital. Listed below are the banks most exposed to Greek sovereign debt ranked as a % of equity capital, showing down to 5%.
It will be interesting to see how the many European banks that have not declared 2011 results account for any Greek debt in their 2011 accounts.
Bank Net Sovereign % of bank % of
Exposure €m equity total assets
Agricultural Bank 10000 na 31
Hellenic Postbank 5371 590 31
Piraeus 8700 248 15
National Bank of Greece 19400 218 16
EFG Eurobank 7900 196 9
Alpha Bank 4600 110 7
Marfin Popular 2943 72 7
Bank of Cyprus 2000 7 5
Dexia 3470 39* 1
BPI 501 29 1
DZ Bank 1195 11 0
Commerzbank 2900 27 0
Deutsche Postbank 1200 21 1
BPCE 1185 14 1
BCP 718 13 1
BNP Paribas 5046 8 0
LBBW 1389 7 0
Société Générale 2500 6 0
ING 2425 6 0
HSH Nordbank 196 5 0