Thursday, July 21, 2011

European Bank Exposure to PIIGS

The EBA published its stress test results of 90 Eurozone banks of which eight were found to have less than the 5% target capital ratio, but actually 20 banks were below that level.  Twelve banks were not listed as failed, because they are raising money.  One German landesbank, Helaba, withdrew from the stress test when its silent participation capital was questioned.

Olaf Storbeck has documented the two different definitions of exposure used in the EBS report which make the different numbers not add up.  More importantly, sovereign default exposure was not included in the study.

Here is an important spreadsheet, which was laboriously compiled by Olaf Storbeck, showing each of the 90 banks exposure to each of the PIIGS.  Spain and Italy have large exposure, but they also had some of the strongest banks.  If you want to get a look at some of the potential exposure of European banks, Storbeck's spreadsheet is invaluable.

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