US banks pull out of eurozone risk
US banks are continuing to reduce their exposure to most of the eurozone countries, according to data from the Federal Financial Institutions Examination Council.
The survey includes responses from 46 US banks, which all reported single-digit declines in risk claims to four of the five peripheral eurozone countries in Q1 2012, compared to the previous quarter.
Country risk claims to Spain have decreased the most with an 8.33% reduction, followed by a 4.71% reduction to Ireland and a 4.61% reduction to risk claims to Greece.
Risk claims to Italy were narrowly down 0.93%, while US banks' exposure to Portugal ticked up by 0.48% − Portugal representing the only increase in country risk claims during the quarter.
In terms of principal amounts outstanding, Italy accounts for US$65.4bn in risk claims, the most for any of the peripheral countries, followed by US$54.3bn in claims in Ireland and US$49.3bn in Spain.
According to the survey, central and Eastern Europe proved fertile ground for credit expansion by US banks and represented the areas of the largest increases.
In Central Europe, the most notable increases were in the Czech Republic and Poland, where claims increased by 23.01% and 10.03% in Q1 2012, respectively.
There was also a 26.8% increase in claims from Russia amounting to US$27bn.
Results for Northern Europe were more mixed. Claims to Germany, representing the second-largest exposure behind the UK, were down 13.1% quarter-over-quarter. Claims to the UK were also down slightly, while risk claims to France increased by 2.52%.
First quarter results also show that US banks increased risk claims to Norway and Iceland by double digit percentages, while country risk claims in the Netherlands jumped 7.68%, totalling US$126.92bn.
In terms of banks, Goldman Sachs reported the largest amount of cross-border claims of US$37.86bn. Morgan Stanley had the next largest with US$20.84bn followed by JP Morgan Chase with US$17.86bn.
Morgan Stanley reported the largest amount of cross-border claims on the German banking sector of US$24.60bn. JP Morgan came second in the German banking sector with US$19bn, followed by Goldman with US$7.08bn.
In terms of total country exposure to Germany, Goldman, the fourth-largest respondent by Q1 2012 total assets, reported the largest growth in total exposure to Germany with a 46.23% increase, followed by Bank of New York Mellon with a 29.41% jump.
Finally, Citigroup reported the largest increase percentage-wise in its total exposure to France with an increase of 18.63%.