Banks of France and Germany have lent $1 trillion to the European countries, but now these banks themselves are facing the debt crisis. According to a report by the Bank for International Settlements, French banks have lent $493 billion to Spain, Portugal and Ireland in 2009; German banks have also given $ 465 billion.
The individual institutions have started disclosing their dept status. Hypo Real Estate Holding, a real estate and public-sector lender based near Munich, has put the debt from the four countries, including Italy, at more than $97 billion. Deutsche Bank, in Frankfurt, has also said that it has €500 million in Greek government bonds.
However, many small scale mortgage lenders, state-owned banks and the saving banks have not opted for voluntary disclosure.
“More information and disclosure on bank and financial institutions’ holdings of periphery paper would be beneficial”, Jacques Cailloux, an Economist at Royal Bank of Scotland, said on Sunday.
After the disclosure by various banks, it is revealed that Spain, Portugal and Greece have a loan of about $1.6 trillion from the banks in 16- euro zone countries. Out of this $1.6 trillion, 61% loan has come from the German and French Banks.
The prevailing uncertainty about the banks at risk has led European Union leader to take outstanding measure to avert a major financial collapse.
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