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Monday, January 31, 2011

Sovereign debt exposure and confusing Bank for International Settlements data

We shouldn’t be confused by the ‘facts’!

Bank for International Settlements data is often quoted in relation to sovereign debt exposures but it adds confusion to an issue short of hard facts.

In March 2010, Germany’s top bank, Deutsche Bank, had a combined €14.8bn of gross sovereign debt exposure to the “peripheral” EU states of Greece, Spain, Portugal, Ireland and Italy, of which €10.4bn was to Italy.

The FT Jan 31, 2011:

French and German banks have the largest exposure to Greece, according to the Bank for International Settlements, with €59bn and €40bn respectively as of last September. German banks are also among the most exposed to Ireland, with €154bn outstanding.

The FT Nov 25 2010:

The Bundesbank also played down German banks’ exposure to Ireland, estimating direct exposure at about €25bn. This is much lower than the Bank for International Settlements estimates, which suggested about $140bn.

Officials said the difference reflected some indirect exposure such as business routed through Dublin-based special purpose vehicles or subsidiaries.

These Are The 20 Banks Most Exposed To The European Sovereign Debt Crisis

Deutsche Bank have broken down the debt threat facing Europe's banks, and it isn't pretty for many of them.

However, the level for Bank of Ireland does not seem correct, if it is just sovereign exposure.

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