The Bankwatch

Tracking the consumer evolution of financial services

DB Research points the way to analyse bank cross border exposures

This is an interesting piece from DB Research looking at banks exposure to countries which in Europe is one of the root causes of the problem there.

The first slide graphically displays the Irish problem.  Remember Ireland guaranteed all banks and thus took on their exposure as sovereign debt.  This decision taken in 2009 increased Irish sovereign exposure by an incredible 900%.

But we knew that,  The second slide was a surprise.  It displays country bank exposure due to lack of diversification – banks keeping all their eggs in one basket.  Canada leaps to the top here due to lending to US entities and banks.  If the US sneezes, Canada catches a cold.

Deutsche Bank Research

bank_size_relative_to_GDP sovereign_borrower_ratio

Written by Colin Henderson

December 10, 2010 at 21:52

Posted in Uncategorized

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