Hungary, look what you’ve kicked off.
JP Morgan published its analysis of which major European banks are exposed to the eastern European nation earlier this Tuesday. And BNP Paribas’ Ivan Zubo and Olivia Frieser have just followed suit with a rundown of country-by-country exposure to Hungary.
Here’s what they say:
Following the warnings of Hungary’s newly elected government led by Fidesz about the perilous state of public finances last week, the country has momentarily stole the spotlight from Southern Europe as potentially being “the next domino to fall” in the European sovereign crisis saga. While the government has reversed course over the weekend saying there was no danger of default, the damage in investor’s confidence has largely been done. Our house view is that the concerns are overdone (e.g. Hungary is one of small minority of EU countries that has a primary budget surplus), but given the agitated state of the markets the situation is not to be taken lightly. Therefore we wanted to provide more information about the degree of exposure of countries in general and banks in particular. We have used the BIS tables as well as annual reports of Hungary’s top 10 banks to get a better view about the level of the exposures.
And the tables:
Austria at the top (again). No surprise there.
What’s more unexpected, according to BNP, is the exposure of France:
It is no surprise Austria is leading the table given Austrian banks strong presence in the Hungarian market (further detailed by the banks specific table). Germany, Italy and Belgium can also more or less be accounted for through the Hungarian subsidiaries of their respective banks as well as direct lending. We are however surprised by the exposure of France and can only guess that this is likely through French Banks’ subsidiaries in the region (e.g. Komercni Banka, 60% owned by SocGen), although this is just a speculation. As we cautioned in the past, there are a number of accuracy issues associated with the BIS figures such as (1) no difference between sovereign and non-sovereign exposure; (2) the figures do not take into account netting of exposures; (3) no detail on the concentration of the exposures and finally (4) no detail on how the information has been aggregated . . .
Ooh la la. The French do seem to get around Europe.
Full BNP note in the usual place.
Related links:
Who’s exposed to Hungary - FT Alphaville
Not for the forint-hearted – FT Alphaville
Forget Club Med, Hungary might be next – FT Alphaville
CEE’s western exposure – FT Alphaville, 2009