French banks cut Greece exposure: BIS

21st July 2010, Comments 0 comments

French banks have cut their exposure to debt-stricken Greece but remain the biggest lenders to a country saved from bankruptcy only two months ago, official data showed on Wednesday.

French banks reduced their exposure to Greece by 10 percent between end-2009 and March 2010 -- from 75.1 billion dollars to 67.3 billion dollars (52 billion euros), according to figures from the Bank of International Settlements, known as the 'central bankers' bank.'

The March level was the lowest since the end of 2007, when the global financial crisis began to bite, sparking a credit crunch which brought most of the developed countries to their knees.

The outstanding French bank loans were mostly made to the private sector and so do not include purchases of Greek government bonds.

According to the BIS figures, German banks were the next largest investors in Greece at 44.2 billion dollars.

In May, the European Union and the International Monetary Fund put together a 110-billion-euro bailout package for Greece whose out of control finances meant it could no longer raise funds on the money markets to pay back debt.

Under the terms of the accord, which saved Athens from default, the major French banks agreed to stand by their lending commitments through the three-year life of the rescue programme.

The BIS figures meanwhile showed that French banks also cut their exposure to other weaker eurozone countries, where public deficit and debt problems similar to Greece's had put the public finances under huge strain.

First quarter French bank exposure to Portugal fell from 44.7 billion dollars to 42 billion dollars; Spain from 219.6 billion dollars to 201.9 billion dollars, with Italy falling from 511.4 billion dollars to 476.3 billion dollars.

© 2010 AFP

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