Blog Post

Who’s (still) exposed to Greece?

Following the recent elections, Greece has come under pressure. Fear is growing about the stance of the newly elected government and there have been signs of renewed capital outflows, as recent data from the central bank show that deposits of Greek households and corporations dropped by 4bn (-2.4% m-o-m) in December. But who (and where) is still exposed to Greece? While exposures of euro area banks are still at very low levels compared to the pre-crisis period, it is tempting to interpret this as a first trace of normalisation and resume in confidence, which the present political turmoil risks to revert.

By: Date: February 3, 2015 Topic: European Macroeconomics & Governance

Since the start of the crisis, the structure of Greek debt has changed considerably (almost 80 percent of government financial liabilities are now accounted for by loans, against slightly less than 20 percent back in 2008). At the same time, the weight of public creditors has increased among the creditors of the government. Figure 1 shows a breakdown of the Greek general government financial liabilities across the main creditor sectors (with public creditor included in non-residents). At the end of 2013, debt due to official creditors amounted to 216 billion of loans (IMF/EU loans) and 38 billion of securities (under SMP). This means that, at the end of 2013, official creditors accounted for about 94 percent of the total loans due to non-residents and 89 percent of the total securities held by non residents.

The government is not the only Greek sector to which foreign investors are exposed

But the government is not the only Greek sector to which foreign investors are exposed, and official creditors are not the only investors in Greece. After Greece came under market pressure and eventually obtained an EU/IMF macroeconomic financial assistance programme in 2010, foreign banks started to rapidly reduce their exposure to Greece (figure 2). Euro area banks’ consolidated foreign claims on Greece – which peaked at about 128 billion euro in 2008 – reached a low of about 12 billion euro in September 2013. UK banks’ exposure reached a peak of 13 billion in March 2008 and dropped to 4.3 billion in December 2012. US banks’ exposure instead was about 14 billion in September 2009 and down to 2.5 billion at the end of 2012.

Interestingly, the only country where banks have been continuously increasing their exposure to Greece since 2013 is Germany

Interestingly, US and UK banks have been increasing their Greek exposure again, since March 2013, reaching back to levels not very far from those of end 2009 /early 2010. US banks’ exposure to Greece as of September 2014 was in fact 8 billion (down from 13 billion in June) and UK banks’ exposure was 10 billion. Euro area banks have behaved very differently and total exposure to Greece has in fact continued to decline in almost all countries. Even more interestingly, the only country where banks have been continuously increasing their exposure to Greece since 2013 is Germany. German banks’ foreign claims on Greece in fact reached 32 billion in March 2010, dropped to as low as 3.9 billion at the end of 2012 and went back to around 10 billion in June 2014. Therefore the recent increase is small compared to the historical level, but it has been continuous (at least until September 2014).

As of the latest available data (September 2014), euro area banks’ exposures to Greece amounted to 96.6 million for Austria, 29.4 million for Belgium, 1368 million for France, 10203 million for Germany, 55.9 million for Ireland, 800 million for Italy, 923 million for the Netherlands, 263 million for Portugal and 301 million for Spain.

The composition of such exposures, however, varies across countries and has significantly changed over time. Figure 3 compares the exposure of selected foreign banks to Greek sector as of september 2014 versus December 2012 (chosen as a starting point because so that comparison is made between two post-PSI dates).

In 2012, exposures to the Greek private non-financial sectors accounted for the largest share of banks’ exposure to the country, with the exception of Belgian banks. In 2014, exposures to Greek banks have significantly increased as a share of total exposures in all countries but for Belgium and Spain. In terms of absolute numbers, only Belgium and Germany have increased their exposure to the Greek private non-financial sector. In absolute numbers, also exposure to the public sector has increased everywhere (apart from Belgium), but the only country where public exposure has significantly increased as a share of the total is Italy.

Since 2012, private investors have been timidly and slowly coming back to Greece

Anybody who has followed the development of the euro crisis knows about the important increase in the weight of public creditor for Greek government debt. The data show, however, that since 2012 (when the ECB introduced the OMT programme) private investors have been timidly and slowly coming back to Greece. While exposures of euro area banks are still at very low levels compared to the pre-crisis period, it is tempting to interpret this as a first trace of normalisation and a resumption in confidence, which the present political turmoil risks reverting.

Read our special Eye on Greece section

This article was republished in italian on lavoce.info


Republishing and referencing

Bruegel considers itself a public good and takes no institutional standpoint. Anyone is free to republish and/or quote this post without prior consent. Please provide a full reference, clearly stating Bruegel and the relevant author as the source, and include a prominent hyperlink to the original post.

View comments
Read article More on this topic More by this author

Opinion

The great macro divergence

Global growth is expected to continue in 2019 and 2020, albeit at a slower pace. Forecasters are notoriously bad, however, at spotting macroeconomic turning points and the road ahead is hard to read. Potential obstacles abound.

By: Jean Pisani-Ferry Topic: Global Economics & Governance Date: December 5, 2018
Read article More on this topic More by this author

Blog Post

The consequences of Italy’s increasing dependence on domestic debt-holders

Bruegel’s updated data set of sovereign bond holdings illustrates how a rising share of Italian debt is held by domestic investors – a development with particularly significant implications, in the context of the Italian government’s disagreement with the European Commission over spending plans outlined in its draft budget.

By: Jan Mazza Topic: European Macroeconomics & Governance Date: November 6, 2018
Read article More on this topic More by this author

Opinion

Greece: What to expect after the bail-out

After being under the close scrutiny of three financial assistance programmes since May 2010, Greece has finally left the bail-out in August 2018. How different is the post-bail-out era from the preceding eight years? Will Greece be able to stand on its own? And how might the country improve its economic outlook? In this post, which summarises a presentation recently given at an Athens conference, the author answers these three questions.

By: Zsolt Darvas Topic: European Macroeconomics & Governance Date: October 9, 2018
Read article More on this topic

Blog Post

The higher yield on Italian government securities could soon be a burden for the real economy

The increase in the spread between Italian (BTP) and German (Bund) government securities is directly an additional burden for Italy public finance, and thus for tax payers. But it could soon also become a burden for the real economy, as the increased yield on Italian government securities could pull up the cost of bank loans for Italian firms, thus imparting a deflationary impact onto the economy.

By: Francesco Papadia and Inês Goncalves Raposo Topic: European Macroeconomics & Governance Date: September 10, 2018
Read article Download PDF More on this topic More by this author

Policy Contribution

High public debt in euro-area countries: comparing Belgium and Italy

This Policy Contribution looks at the evolution of public debt in Belgium and Italy since 1990 and uses the debt dynamics equation to explain the contrasting evolution in the two countries in the run-up to the introduction of the euro, during the early years of the euro and since the beginning of the crisis, arguing that the euro could have been used also by Italy to undertake sufficiently large fiscal adjustment.

By: André Sapir Topic: European Macroeconomics & Governance Date: September 6, 2018
Read article More on this topic

Opinion

The ECB is compromising the attractiveness of euro-area sovereign bonds

The ECB should refine its collateral framework in order to continue protecting its balance sheet without putting at risk the safe-asset status of sovereign bonds of the euro area.

By: Grégory Claeys and Inês Goncalves Raposo Topic: Finance & Financial Regulation Date: August 29, 2018
Read article More on this topic

Opinion

Integrity of official statistics under threat

Andreas Georgiou has unwittingly become an international icon for statistical integrity. His continuing politically-motivated persecution is highly damaging for Greece, and more broadly for the credibility and reputation of the euro area.

By: Edwin M. Truman and Nicolas Véron Topic: European Macroeconomics & Governance Date: August 10, 2018
Read article More on this topic More by this author

Opinion

Griechenland braucht einen Neuanfang

This was first published by Die Zeit. Acht Jahre nach Beginn des ersten Hilfsprogramms für Griechenland ist es soweit – Griechenland soll wieder auf eigenen Füßen stehen. Die Eurogruppe soll heute das Ende des dritten Hilfsprogramms beschließen und die Modalitäten für die Zeit danach definieren. Ziel sollte es jetzt sein, einen tragfähigen Ausstieg aus dieser für alle Seiten […]

By: Guntram B. Wolff Topic: European Macroeconomics & Governance Date: July 3, 2018
Read article More on this topic More by this author

Blog Post

The European Union must defend Andreas Georgiou

Andreas Georgiou’s case raises disturbing questions about the integrity of European statistical processes. Forceful action by EU authorities on Mr Georgiou’s case is long overdue. The European Union also needs to consider reforming its statistical framework to ensure a similar scandal cannot recur.

By: Nicolas Véron Topic: European Macroeconomics & Governance Date: June 26, 2018
Read article More on this topic

Blog Post

Is the ECB collateral framework compromising the safe-asset status of euro-area sovereign bonds?

Central banks’ collateral frameworks play an important role in defining what is considered as a safe asset. However, the ECB’s framework is unsatisfactory because it is overly reliant on pro-cyclical ratings from credit rating agencies, and because the differences in haircuts between the different ECB credit quality steps are not sufficiently gradual. In this note, the authors propose how the ECB could solve these problems and improve its collateral framework to protect its balance sheet without putting at risk the safe status of sovereign bonds of the euro area.

By: Grégory Claeys and Inês Goncalves Raposo Topic: European Macroeconomics & Governance Date: June 8, 2018
Read article More on this topic More by this author

Blog Post

Are SBBS really the safe asset the euro area is looking for?

The European Commission is pushing to create a synthetic euro-area-wide safe asset in the form of sovereign bond-backed securities (SBBS). However, SBBS do not fully fulfil their original promises. If introduced on a massive scale, they might increase the supply of safe assets in good times and loosen the link between sovereigns and banks. But they will not give governments a means to maintain market access during crises, they might change incentives for governments to default, and they could pose a problem to individual bonds not included in SBBS if, in the end, they are put at a regulatory advantage vis-à-vis individual bonds.

By: Grégory Claeys Topic: Finance & Financial Regulation Date: May 28, 2018
Read article More on this topic More by this author

Blog Post

Argentina’s troubles

Argentina has abruptly called on the International Monetary Fund for financial help, amid currency pressures. We review recent economists’ position on this.

By: Silvia Merler Topic: Global Economics & Governance Date: May 22, 2018
Load more posts