Reuters: US Banks Exposure to PIIGS Is $176 B

Who could have known that a small country like Greece can move the global stock markets, as it has done exactly that for the past several weeks. Initially, it was discounted here in the U.S. as the problem for mostly European banks, particularly U.K. banks; U.S. banks had very little exposure to the debts in PIIGS (or Club Med plus Ireland) or to the Central and East European debts, or so it was said.

Uh huh.

Here's from Reuters. It turns out that the top 10 U.S. banks (the usual suspects) have $176 billion exposure to Greece, Portugal, Ireland, and Spain. Exposure to Ireland alone is $86 billion.

US banks have $176 bln exposure to Greece, others (2/9/2010 Reuters)

"NEW YORK, Feb 9 (Reuters) - U.S. banks have $176 billion in exposure to Greece, Ireland, Portugal and Spain, with risks concentrated among the 10 largest U.S. banks, Barclays Capital said on Tuesday.

"The total exposures to these nations, however, comprises only around 5 percent of the total foreign exposure of U.S. banks, Barclays analysts Jonathan Glionna and Miguel Crivelli said in a report.

"Exposures to Greece and Portugal comprise less than 1 percent of cross-border exposures, they said. The data is based on a lending survey by the Federal Financial Institutions Examinations Council (FFIEC), and includes cross border claims, derivatives and foreign office claims on local residents.

"Concern about sovereign debt has increased on worries that Greece will need a bailout to avoid a debt default.

"Credit default swaps on bank debt have increased in recent weeks, in line with rising concerns over sovereign debt risk.

"For example, the cost of credit default swaps insuring JPMorgan's (JPM.N) debt have risen to around 78.5 basis points, or $78,5000 per year for five years to insure $10 million in debt, from 47 basis points at the beginning of the year, according to Markit intraday.

"The FFIEC data shows that 10 U.S. banks -- Bank of America (BAC.N), Citigroup (C.N), JPMorgan, Wells Fargo (WFC.N), Bank of New York (BK.N), State Street (STT.N), Goldman Sachs (GS.N), Morgan Stanley (MS.N) and the U.S. branches of Deutsche Bank (DBKGn.DE) and HSBC (HSBA.L) -- hold 96 percent of the risk, Barclays said.

The banks have $86 billion in exposure to Ireland, $68 billion to Spain, $18 billion to Greece and $9 billion to Portugal, Barclays said." [Emphasis is mine]

Ireland looks scarier than Greece when you look at the numbers. Ireland's GDP (2009 estimate) is $177 billion. (Source: CIA World FactBook)

U.K. banks have £100 billion (US$157 billion) exposure, according to The Independent UK article: £76.2 billion (US$119 billion) exposure to Spain, £7.8 billion (US$12 billion) to Greece, and £15.6 billion (US$24 billion) to Portugal. Total Anglo-American exposure: $333 billion

So, if EU, the supra-national political entity with no constituents other than bureaucrats and politicians, can essentially force Germany to bail the PIIGS out (starting with G), it won't be bailing out EU member countries. It will be bailing out US and UK bankers so that they get their money. Or worse, EU (or piggy bank Germany) will be checkmated by these bankers, and be forced to pay up.

As Zero Hedge indicated already, can you smell A.I.G.??

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