Fitch gives reason for Germany to dig in on Greece
Highlighting a key reason why the Germans have dug in with their position on Greece that they don’t want to continue to bail them out further, they seem comfortable with their own banks exposure to Greece. Credit rating agency Fitch in a note today just published is saying “that it does not currently envisage any rating action on German banks as a direct result of their exposure to Greece…In addition, most German banks have limited exposure to any risk relating to Portugal and Ireland.” They do though have this caveat, “The agency sees high potential contagion risks if there were any restructuring of Greek sovereign debt.” Now granted we have to take commentary from a rating agency with a clear grain of salt but it does recognize that if this debt crisis is ring fenced around Greece, Ireland and Portugal, the region can get by BUT if it spreads to Spain and/or Italy, as has been discussed ad infinitum and is a very distinct possibility, we’ll have a major problem.
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May 25th, 2011 at 1:38 pm
Right. And if we can confine the US housing problems to Subprime and Alt-A borrowers, there won’t be a general problem there either.
May 25th, 2011 at 1:48 pm
“that it does not currently envisage any rating action on American banks, Bear Stearns and Lehman Brothers included, as a direct result of their exposure to subprime loans…In addition, most American banks have limited exposure to any risk relating to subprime and alt-A.”
May 25th, 2011 at 5:10 pm
If even rating agency can see the problem, I guess it’s a pretty big problem.
May 25th, 2011 at 7:41 pm
I also assume it will be a lot more politically acceptable to bail out their own banks that Greece’s crony state.