French financial institutes unveil 53-bln-euro risk exposure to Greek debt crisis

08:15, May 07, 2010      

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French financial institutes as a whole may have the biggest risk exposure to Greece with a figure expected to reach 53 billion euros (66.9 billion U.S. dollars), as its biggest listed bank BNP Paribas announced Thursday that its exposure to the debt-ridden country has amounted to 8 billion euros.

French banks and insurance agency continued these days to disclose their exposures to Greece, where the degrading situation causes these French institutes and their subsidiaries to hold reserve funds in facing eventual non-refundable debts.

The exposure of the BNP Paribas to Greece accounted 5 billion euros in sovereign debt and 3 billion euros in loans, including commercial investments mainly in the shipping sector, the company said in a statement.

With this announcement, the BNP has surpassed the Credit Agricole, the largest retailing banking group in France, with the largest nominal amount of Greek sovereign debt.

Last week, the Credit Agricole said it held 850 million euros of Greek government bonds. It owns the Greek bank Emporiki, which lost 209 million euros in this first trimester.

Also on Thursday, the French mutual bank BPCE (Banque Populaire & Caisse d'Epargne) declared 2.1-billion-euro risk exposure to Greece, including 1.4 billion euros of Greek sovereign debt and 700 million euros in commercial loans.

In BPCE's subbranch Natixis alone, a famous French investment bank, the exposure to Greek risk was recorded at 882 million euros, including service on sovereign debt, banks and clients.

One day before, the Societe General SA (SocGen) estimated Wednesday its Greek exposure risk at 3 billion euros by the end of April.

In view of the financial crisis, the France's second biggest bank by market value has tightened the loan approval conditions at its Greek banking subsidiary, in which it owns a majority, according to the company's quarterly report.

Owning subsidiaries in Greece, SocGen and Credit Agricole have been placed in more vulnerable situation. So far, the two parent companies have stressed that they would apply to their subsidiaries the same management criteria within the group.

The performance of Greece's Geniki Bank was not favorable in the first trimester, while France's SocGen owns 54 percent share of the Greek retail and commercial bank.

Additionally, the France's leading insurance group AXA declared a risk exposure of 500 million euros in late April.

Though the main French banks all have direct exposure on Greek sovereign debt, French Economy Minister Christine Lagarde said she wasn't concerned about these risks, only hoping the banks to communicate on their commitments.

In an interview on French television LCI, the minister said French banks have agreed to maintain their exposure to Greece.

However, the current risk exposure can't be no-pressure for the banks as the contagion panic keeps spreading even the rescue package by the European Commission and the International Monetary Fund was already hammered out.

"The commitments we have made we will keep ... we will do all this but nothing more," the Chief Executive of BNP Paribas Baudouin Prot said after presenting the company's quarterly report, which means it wouldn't participate in the bailout plan as some German banks plan to do.

Source: Xinhua


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