German lenders were the biggest foreign owners of Greek government bonds with $22.7 billion in holdings last year, making them a likely negotiation partner in burden-sharing deals for the country, data from the Bank for International Settlements showed.
French banks, which led the group of Greek creditors with overall claims amounting to $56.7 billion, trailed their German peers on sovereign debt with $15 billion, according to the June report from the Basel, Switzerland-based BIS. The overall figure for French banks was inflated by $39.6 billion in lending to companies and households, mainly because of Credit Agricole SA’s Greek unit, Emporiki Bank SA. German lenders have no major units in the country.
At the end of 2010, Greek government bonds held by banks in countries reporting to the BIS totaled $54.2 billion, of which 96 percent was owned by European lenders. Germany and France, which accounted for 69 percent, may be asked to weigh in when the European Union goes ahead with plans to win Greece creditors to roll over their debt in a “Vienna-style” program.
“Implementing an approach similar to the Vienna Initiative would demonstrate private sector involvement has been explored,” Justin Knight, a European rates strategist at UBS AG in London, wrote in a note last week. This may make voters “more amenable to the idea that public sector funds need to be deployed going forward,” he said.
European officials are preparing a new aid package for Greece that includes a “voluntary” role for investors after the EU and the International Monetary Fund approved the fifth installment of Greece’s 110 billion-euro ($161 billion) bailout last week.
Among the largest disclosed holdings of Greek government bonds by non-Greek European banks are BNP Paribas SA’s 5 billion euros, Dexia SA’s 3.5 billion euros, Commerzbank AG’s 3 billion euros, Societe Generale SA’s 2.7 billion euros, ING Groep NV’s 2.4 billion euros and Deutsche Bank AG’s 1.6 billion euros, Goldman Sachs Group Inc. said in a research note published last month.
“We have long argued that the holdings of Greek government debt are fairly concentrated,” Barclays Capital analysts, led by Sherif Hamid, wrote in a note June 3. “The top 30 holders likely account for roughly two-thirds of the debt, and this should make it easier to negotiate and achieve a decent success rate on any restructuring.”
340 Billion Euros
Greece’s total debt is 340 billion euros, according to data compiled by Bloomberg. The 7.4 billion euros in Greek government bonds held by FMS Wertmanagement GmbH, which is winding down assets of Germany’s Hypo Real Estate Holdings AG, weren’t included in the BIS figures because FMS isn’t a bank. Neither were the European Central Bank’s holdings, estimated at 50 billion euros by Citigroup Inc. Greek banks own about 60 billion euros of the country’s debt, according to Goldman Sachs.
The breakdown of exposure by debtor category, released in detail for the first time by the BIS, showed differences among creditors’ exposure to Greece and other nations.
The new data showed that the structure of debt and the holdings are different in Portugal and Ireland, the other two euro-area countries that received emergency loans from the EU and the IMF.
Overall foreign claims on Ireland, which has about half Greece’s gross domestic product, were three times as high as those on Greece, totaling $462.3 billion, according to the BIS.
Sovereign debt accounted for 4 percent of the Irish total, compared with 37 percent in Greece. Three-quarters was lending to companies and households, especially by British banks, whose claims amounted to $112.4 billion. Irish banks borrowed $85.1 billion internationally, with German banks also being the biggest lenders.
Portugal’s government owed $34.6 billion mostly to banks in Spain, Germany and France, with each of the countries accounting for about a quarter of the total. Spanish banks provided more than half of the $124.4 billion in lending to Portuguese companies and households.