European banks flee Greece

José Luis Marco, CAPITAL MADRID | Although Spanish banks have little direct exposure in Greece, the country over which hangs the euro zone exclusion threat, something different happens with several European banks: they have a direct interest in the Hellenic country both with their branches in the country and with the assumption of Greek sovereign debt.

Some of the biggest banks are partners or shareholders of several Spanish banks. Banco Comercial Portugues (BCP), which maintains a cross shareholding with Banco Sabadell, and Credit Agricole, the second largest shareholder of Bankinter now with less than 20%, try these days the immediate sale of their branches in Greece, which only have caused them headaches in recent years due to the rise of delinquency and the significant deposits drain by fear of an Argentinian corralito-like situation.

The British branch of Santander, managed by Ana Patricia Botin, has highlighted the European banks frear of a possible breakup of the euro zone, but she was not the only one giving warning signs. Greece has been in the spotlight for a while.

“Nothing can stop Greece to leave the euro zone and go back to the fifties,” s Belgian weekly Neweurope indicated in its latest issue.

Given these concerns about the situation in Greece, it is not surprising that some European banks have put all eggs in one basket to leave the country by selling their branches. Spanish banks are slightly exposed, with holdings in Hellenic and in Greek sovereign debt, but the situation is very different for some of its leading partners or shareholders.

Bankinter’s second largest shareholder Credit Agricole put its greek subsidiary Emporiki on sale several weeks ago. In fact, the results of the French financial group have suffered a negative impact of 370 million euros for its exposure to Greece. Similarly, Banco Comercial Portugues (BCP) is trying to sell its greek branch and its roumanian stake, according to Portuguese media. BCP is a Sabadell bank shareholder with a 4.69% stake that has registered a loss of 544 million euros in the first half, largely due to the drag of the 502 million from its greek branch.

SOVEREIGN RISK

All markets are awaiting today’s ECB meeting which will discuss its role in the rescue of the sovereign debt of certain countries. The ECB has already refused financing to Greek banks with its liquidity (Spanish banks are the ones that benefit the most from it, by the way).

Belgian bank Dexia is the most exposed to hellenic sovereign debt. Dexia has been bailed out twice since the crisis outbreak, with a balance of 3,462 million euros and its impact on capital of 38.7%, regardless of the possible remove to be imposed, according to Citigroup estimates.

German banks also have significant commitments to Greek sovereign debt, especially Deutsche Postbank (1,373 million euros) and Deutsche Bank (1,092 million euros), but with a disparate impact on their capital ratios. France’s Societe Generale and the British Royal Bank of Scotland and HSBC have also incurred substantial sums with hellenic sovereign debt, as well as France’s BNP Paribas (over 5,000 million euros).

On the contrary, Spanish banks have very little exposure to Greek sovereign debt. However, the delicate situation of some of its partners or shareholders, such as BCP or Credit Agricole, may determine their relationship in the future.

 

 

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