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Global banks avoiding Irish debt says BIS
13.12.2010
Bank of International Settlements (BIS) HQ, Basel
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 BIS 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$187.5bn in exposure to Ireland, while German lenders had US$186.4bn.