London: HSBC’s exposure to Greece totalled some $6 billion (Dh22 billion) at the end of 2014, the British bank has said, making it one of the most exposed foreign banks to the debt-laden nation, despite cutting loans there last year.
Most foreign banks have massively cut their exposure to Greece after a restructuring of government debt in 2012, with French and German lenders leading the way. Greece agreed on Friday to extend its financial rescue deal with Europe for another four months to avert a possible banking collapse.
But Athens still needs to convince its EU partners about its reform plans and Greece might yet have to impose capital controls or possibly even quit the single currency.
Foreign banks with Greek loans could lose money in such a scenario, potentially from foreign exchange losses if a new currency was devalued or any increase in loan losses if the economy deteriorated.
HSBC said its exposure to Greece at the end of 2014 mainly consisted of $4 billion of loans and $2 billion of reverse repo agreements with banks. The bank had reported a net exposure to Greece of $7.3 billion at the end of 2013. HSBC, which has been in Greece since 1981, said $2 billion of its loan exposure was to the shipping industry and denominated in dollars and booked in London, making it less sensitive to the Greek economy.
Overseas banks had $46 billion of loans to Greece at the end of last September, down from $138 billion in early 2011, according to data from the Bank for International Settlements (BIS), which monitors cross-border lending. Analysts at JPMorgan said Greek exposure for European banks was now limited, adding that the main risk from a potential Eurozone exit was contagion to other countries, especially Italy.
French banks cut their Greek loans to $1.8 billion at the end of September, from $57 billion in 2011, as Societe Generale and Credit Agricole sold their Greek units and lenders sold government bonds, taking big losses.
German banks cut their exposure to $13.5 billion at the end of September from $23.8 billion in 2011, leaving them with the same exposure as British lenders. Banks from those two countries had the most loans to Greece, the BIS data showed.
Royal Bank of Scotland said its balance sheet-exposure to Greece was 387 million pounds ($598 million) at the end of 2013, the highest of the major UK banks after HSBC. The biggest exposure among German lenders is for state-owned development bank KfW, with lending to the Greek state totalling 15 billion euros, banking industry group BdB said in January.
US banks had loans of $10.6 billion at the end of September. Citigroup last year sold its consumer banking operations in Greece, although it kept its corporate and institutional banking business there.