A telling chart (which you can click to enlarge) from BNP Paribas’ Ricardo Santos and Michelle Lam. As they note — after a break particularly in the second half of 2012, there’s recently been a marked increase in banks’ holdings of sovereign debt… especially in Italy, France, Portugal and Spain.
Or to put it another way:
With the exception of Greece and Belgium, banks in all eurozone countries increased their holdings of government debt between November 2012 and March 2013. This increase was more substantial in Spain, where the banks held the equivalent of more than 10 per cent of the stock of Spanish debt as of the end of 2012.
Lend the money out to businesses or to governments you are intertwined with anyway?
(Click to enlarge — but if you don’t want to, that’s 10-year yields with France at the top in blue, Italy in the middle in brown with Spain in green and Portugal at the bottom in grave-grey.)
The rest of BNP’s chart book is in the usual place.