Banks hold €207bn of foreign debt

DOMESTIC BANKS and building societies had a foreign exposure of €207 billion at the end of September, according to new Central Bank data.

The €207 billion total included a combined €7.5 billion exposure to Spain, Portugal and Greece, the EU countries beyond Ireland seen as being most likely to default.

The figures show Irish banks held about €10 billion in foreign sovereign debt at the end of September, including a combined €683 million in Spanish, Portuguese and Greek bonds.

They held almost €1.4 billion in German bonds.

In overall terms, Irish banks’ foreign exposure is declining, having dropped by €23.8 billion, or about 10 per cent, over the third quarter of the year. The Central Bank said total “foreign claims” had fallen by 29 per cent since peaking at €292 billion two years ago. The “claims” covered include loans, deposits, equities and debt securities.

The largest international exposure is to the UK, which includes Irish banks’ operations in the North. This accounted for 57 per cent of the total at the end of September. Some 12 per cent of the foreign claims were US-based, with Poland, where AIB held a banking stake, next at 6 per cent.

A sectoral breakdown of the exposure shows that the most of it – almost 80 per cent – related to the non-bank private sector.

The Central Bank said the banks’ total exposure to foreign sovereign debt was “low” at about €10 billion, despite having climbed slightly over the quarter. The UK was again the biggest destination in this category, with about €2.2 billion, followed by Germany. Irish banks held €394 million in Spanish sovereign debt at the end of September, down from €423 million three months earlier. Portuguese debt came to €248 million, while exposure to Greek sovereign debt was €41 million. Exposure to Belgian debt almost doubled to €219 million over the quarter.

The institutions covered by the data are: AIB, Bank of Ireland, Anglo Irish Bank, EBS, Irish Life & Permanent and Irish Nationwide.