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>First, a minor point: The biggest holders of Greek debt were French banks by far I was under the impression that the German banks were the biggest holders of

>First, a minor point: The biggest holders of Greek debt were French banks by far I was under the impression that the German banks were the biggest holders of Greek debt followed by France and Italy.

Lazare 11y ago
No. Back in 2012, French banks had about €30 billion in exposure, with UK banks holding €6.4b and German banks less than €5b ([1]). BNP Paribas alone lost almost as much as every German bank combined started with, to put it in perspective. After the disaster that was the bond swap (more than 50% of face value removed, and swapped for bonds with 30 year terms, AND the interest rate slashed to almost nothing), most of the banks cut their losses and ran. The exception is, yes, the German banks (along with US and UK banks). Their exposure has climbed, with each now holding around €10b, with Germany slightly in the lead ([2]). So at the time of the 2012 haircut, French banks were most exposed (among banks) and lost a lot of money. Today German banks are most exposed (among banks), but it's a lot less than it was; private sector debt is way below its peak. But keep in mind! Something like 80% of all Greek debt is held by public institutions, aka, the troika. All foreign banks, added up, are still something like...I dunno, 10% of total Greek debt. Greek is in hoc to the EU, the ECB, and the IMF; the €10b owed to German banks is peanuts in comparison, to the extent that the banks don't even have a seat at the negotiating table any more. [1]: http://www.telegraph.co.uk/finance/financialcrisis/9125614/Graphic-Greeces-bailout-bond-swap-explained.html http://www.telegraph.co.uk/finance/financialcrisis/9125614/G... [2]: http://www.theguardian.com/world/datablog/2015/jun/19/the-greek-debt-what-creditors-may-stand-to-lose http://www.theguardian.com/world/datablog/2015/jun/19/the-gr...
- Ntrails 11y ago
  Why did the Uk/German holdings increase? When you say they now hold 10b I assume you mean face (redemption) value rather than market?
  - Lazare 11y ago
    I don't really know. Some mixture of betting that Greece won't default and banks acting as a dumping ground for bad debts (someone has to end up owning it), I guess. And yes, all numbers are face value. The market value of all that greek debt is...well, VERY much an open question right now. :)

>First, a minor point: The biggest holders of Greek debt were French banks by far I was under the impression that the German banks were the biggest holders of Greek debt followed by France and Italy.

Lazare 11y ago

No. Back in 2012, French banks had about €30 billion in exposure, with UK banks holding €6.4b and German banks less than €5b ([1]). BNP Paribas alone lost almost as much as every German bank combined started with, to put it in perspective. After the disaster that was the bond swap (more than 50% of face value removed, and swapped for bonds with 30 year terms, AND the interest rate slashed to almost nothing), most of the banks cut their losses and ran. The exception is, yes, the German banks (along with US and UK banks). Their exposure has climbed, with each now holding around €10b, with Germany slightly in the lead ([2]). So at the time of the 2012 haircut, French banks were most exposed (among banks) and lost a lot of money. Today German banks are most exposed (among banks), but it's a lot less than it was; private sector debt is way below its peak. But keep in mind! Something like 80% of all Greek debt is held by public institutions, aka, the troika. All foreign banks, added up, are still something like...I dunno, 10% of total Greek debt. Greek is in hoc to the EU, the ECB, and the IMF; the €10b owed to German banks is peanuts in comparison, to the extent that the banks don't even have a seat at the negotiating table any more. [1]: http://www.telegraph.co.uk/finance/financialcrisis/9125614/Graphic-Greeces-bailout-bond-swap-explained.html http://www.telegraph.co.uk/finance/financialcrisis/9125614/G... [2]: http://www.theguardian.com/world/datablog/2015/jun/19/the-greek-debt-what-creditors-may-stand-to-lose http://www.theguardian.com/world/datablog/2015/jun/19/the-gr...

Ntrails 11y ago
Why did the Uk/German holdings increase? When you say they now hold 10b I assume you mean face (redemption) value rather than market?
- Lazare 11y ago
  I don't really know. Some mixture of betting that Greece won't default and banks acting as a dumping ground for bad debts (someone has to end up owning it), I guess. And yes, all numbers are face value. The market value of all that greek debt is...well, VERY much an open question right now. :)