`Brexit' Risks Leaving European Banks With $123 Billion to Cover
- Lenders may have to dump some securities if Britain leaves EU
- Bonds may no longer meet liquidity requirements under Basel
'Brexit' May Leave EU Banks in Credit Hole
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If Britain decides to leave the European Union, a corner of the credit market may depart with it and European banks could be left having to replace as much as 108 billion euros ($123 billion) of securities.
Lenders from the EU that bought bonds backed by U.K. mortgages, bank loans and credit-card debt may find themselves caught up in the fallout of a “Brexit” because the debt might no longer count toward their emergency cash reserves. While a settlement with the bloc would take years to reach, lawyers and analysts are beginning to flag concerns about holdings of the asset-backed securities, a market that’s already been hammered since the financial crisis.