Greek Banks Take Out EUR0.65B From Market In 2Q, French Banks Add EUR4.7B

10.26.2011 By Claudia Medrega

Greek banks continued to reduce their exposure to Romania in the second quarter of this year, while French and Austrian banks increased their financing, according to data published by the Bank for International Settlements (BIS), also known as the bank of central banks.

The exposure of Greek banks to Romania declined by EUR0.65 billion in the second quarter compared with the end of March, to EUR15.03 billion. The significant exposure of Greek banks is considered a risk factor, but both in the first quarter and in the second quarter BIS statistics indicated very slight reductions of exposure. Last year, the exposure of Greek banks fell by EUR1.6 billion to EUR15.8 billion.

The exposure of French banks increased by EUR4.7 billion in the second quarter, compared with the end of March, to EUR13.78 billion.

Austrian banks increased their exposure by a little over half a billion euros, with their exposure to Romania reaching EUR30.83 billion in June. The rate of Austrian fund inflows is comparable with that recorded in the first three months.

These moves occurred as the Vienna agreement to retain exposure of large banks expired in March and tensions in the euro zone and especially in Greece intensified.

BIS data are based on the bank's own methodology, different from that used in the stress test that European banks had to undergo in early summer.

The BIS methodology also takes into consideration the overall value of assets of local subsidiaries of foreign groups, although quite a few of them are locally financed and do not amount to cross-border loans.

European banks had an exposure of $117.7 billion (EUR81.4 billion) to Romania, i.e. 95.7% of foreign exposure to Romania, according to the latest BIS report.

Austrian banks continue to have the largest exposure to Romania, cumulating around 38% of the overall exposure, followed by Greece - 18.5% and France - 17%.

(English version by Daniela Stoican)