Fine Gael’s claim today that that Irish financial institutions may be exposed to up to €7 billion should Greece default raises an interesting question: which countries have the largest exposure to Greek debt? According to the Bank of International Settlements, exposure to Greek debt is very much a European affair. The Peterson Institute for International Economics report (based on data from the Bank of International Settlements) that French banks —with €60 billion—have the largest exposure to Greek debt, on an ultimate risk basis (mostly through ownership of Greek domestic banks, such as Crédit Agricole’s controlling share of Emporiki Bank), while German banks with a €34 billion exposure are the other principal eurozone creditor. The potential losses facing the US are significantly less (€13 billion).
Of the other much-maligned “PIIGS”, Portugal and Ireland could also suffer hefty losses in the event of a Greek default: Portuguese banks have €7.5 billion in exposure to Greece, while Irish banks could be sweating over the fate of €6.5 billion. Of course, given the astronomical sums of money we have already poured into our banking system, €6.5 billion almost sounds “manageable”.
Private Banking Sector exposure to Greece by country, 2009 Q4
*Luxembourg and Switzerland figures are combined in Table 1 as the $60+ billion exposure of Luxembourg to Greek debt relates to the 2009 Q4 shift of residence of the European Financial Group (EFG) SA, ultimate owner of EFG Eurobank from Switzerland to Luxembourg. Source: ECB, Bank of International Settlements (BIS), estimates calculated by Jacob Funk Kirkegaard for the Peterson Institute for International Economics.