Global banks avoid­ing Ir­ish debt, says BIS

The Pak Banker - - Company& -

LONDON: Euro­pean and global banks have re­duced their ex­po­sure to Ir­ish debt in the last quar­ter, ac­cord­ing to the Bank of In­ter­na­tional Set­tle­ments (BIS).

Banks' hold­ings in Ir­ish, Greek, Span­ish and Por­tuguese debt have been re­duced by at least US$107bn to US$2.28 tril­lion, said Bank of In­ter­na­tional Set­tle­ments in its lat­est quar­terly re­port.

It said banks con­tin­ued to di­rect funds to­wards the faster-grow­ing emerg­ing mar­kets at the ex­pense of the slower-grow­ing ad­vanced economies.

"Since early Novem­ber, at­ten­tion has shifted to the euro area, with mar­ket par­tic­i­pants be­com­ing in­creas­ingly concerned about ex­po­sures to Ire­land and other economies," the BIS said.

"Ir­ish govern­ment bonds came un­der par­tic­u­larly strong pres­sure, but Greek, Por­tuguese, Span­ish and later Bel­gian and Ital­ian govern­ment bonds were also af­fected. Sov­er­eign yield spreads be­tween these coun­tries, and Ger­many con­tin­ued to re­flect con­cerns about their pub­lic fi­nances."

Even as an EU sup­port pack­age for Ire­land was agreed in late Novem­ber, the stress per­sisted, with at­ten­tion turn­ing first to Por­tu­gal and Spain and later to Bel­gium and Italy, the bank said in its re­port.

It noted also that the sit­u­a­tion did, how­ever, sta­bilise in early De­cem­ber in an­tic­i­pa­tion of pos­si­ble ECB sup­port.

Banks have been the sec­ond-worst per­form­ers among 19 in­dus­try groups in the Stoxx Europe 600 In­dex this year. The fig­ures in the BIS sur­vey showed that Bri­tish banks had US$187.5 bil­lion in ex­po­sure to Ire­land, while Ger­man len­ders had US$186.4 bil­lion. -PB News

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