Europe's Banks Dump Euro Debt, Look For Investors
On 14th November as per a Bloomberg report Christian Clausen President of European Banking Federation advised Europe’s Banks to dump Italian debt and move out of the epicenter of the EU crisis. Banks are major holders of Italian bonds, having picked up over 40% of the $22 billion Italian bonds issued since 2009. Till late last year Europe’s Banks held a big chunk of Italian bonds worth Euro 326 billion almost 17 % of Italy’s total debt of 1.9 Trillion Euros. However since early this year several EU Banks started disinvesting in Italian and Eurozone bonds raising yields and debt cost.
French Bank BNP Paribas that held Euro 28 billion debt disinvested Euro 8.3 billion bonds in the last four months while Commerzbank which had exposure of Euro 11.7 billion reduced its burden by Euro 3 billion. Others Banks like the now nationalized Franco Belgian bank Dexia had exposure of Euro 15.8 billion, Societe Generale Euro 21 billion, Credit Agricole Euro 10.8 billion and HSBC Euro 9.9 billion have frantically dumped Italian bonds reported Reuters, a fortnight back. Deutsche Bank was the first to set of this trend when it cut its exposure to the Italy, Greece, Portugal and Spain in July that set of the panic selling by other Banks of Europe’s debt.
Had patriotic Italian and Spanish Banks not rushed to the rescue of its own national bonds the situation in Europe would have been worse as EU Banks planned to sell over $300 billion of debt. As a result of this panic Italian Bank Intesa Sanpaolo that held Euro 60 billion of Italian debt, UniCredit and Banca Monte dei Paschi di Siena that held 49 billion Euros and 32 billion Euros respectively hold more Italian sovereign bonds today. Banco Santander the 6th largest global bank with assets of $1438 billion as per Forbes 2011 was forced to buy Spanish debt and the already beleaguered National Bank of Greece had to pick up Greek sovereign debt. So much for the much talked of Franco German effort to save the European currency and union.Continued on the next page