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Guest Post: Bank Exposure To Bulgarian And Romanian Sovereign Risk
Submitted by Jeff Borack of Kerrisdale Capital
Bank Exposure To Bulgarian And Romanian Sovereign Risk
There’s been a lot of talk recently about Hungary following in Greece’s footsteps and potentially defaulting on its debt. Bulgaria and Romania are two other weak economies in Eastern Europe, and the chart below shows bank exposure by country to Bulgaria, Romania, Hungary and Greece (source):
It’s interesting to note the exposure that Greece has to Bulgaria and Romania. Romanian and Bulgarian debt comprise more than 25% of the foreign debt that Greek banks hold. Austria also has a high concentration of risk in these four countries, at 29% of total foreign claims outstanding. When investors talk about contagion, what they are really referring to is positive feedback loops. We can see from the chart above how trouble at one country can quickly develop into a concern for other countries. The situation in Greece could make it difficult for Bulgaria and Romania to roll over their debt, an event which would in itself reduce the value of Greece’s assets, creating further difficulty for Bulgaria and Romania.
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that Greece column at France tells it all.
ratava,
That's why the French were going ape on Merkel, for the ONE T bailout, that will do nothing.
BIG exposure..............
It tells a lot, but it still only tells part of it.
Austria gets a double dose of pain if Hungary and Romania go tits-up with sovereign risk.
So... what happens if Austria is the next source of sovereign risk? Or what happens if Austrian banks start going into default? How much exposure do other countries (Germany, Switzerland) have there as investors?
It's a mess...
Meltdown everywhere one looks.
circular reference......
Recursive function with fixed point near zero.
Greece really knows how to pick winners.
Taleb from this morning on debt spreading like cancer......
http://www.cnbc.com/id/37610064
I love Taleb's quote:
Obama administration's efforts to pull the US out of recession haven't succeeded, according to Taleb. "It's not that they make mistakes, it's that they almost get nothing right."
Eastern Europe is fucked. Has to be. No more funding from Eurozone banks, stagnant economies. IMO this is the next crisis. Then Germany is surrounded... or at least attacking in all directions.
"Fuck the doomed"
Let's hope "the doomed" are blond and have nice tits :)
Agreed...lookin to harem-build with my FRNs
Looks like dominos to me.
The PIIGS are eating their own vomit.
The headline reminded me of an old joke- A young jet-setter woman goes to a doctor with a problem down in her private parts. She gets up on the exam table and spreads her legs. The doctor takes a long look and asks her "Have you ever had a checkup there?".
She answers "No, maybe a few Bulgarians, though".
Mr. Dan Ivandjiiski, you should not be so cruel with your homeland, Bulgaria...
Again, as with Hungary (and Iceland), it's hard to blame the Euro here. Though the goal of Euro entry may well have motivated the Bulgarian budget fraud, of course.
Trample the wounded
Hurdle the dead
Deutsche Bank net short 2.0 b of Spain/Portugal?
What sayest thou Frau Merkel?
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