Greek debt threatens European banks

The financial crisis in Greece could have wide-ranging effects on other parts of Europe. A number of banks on the continent have been exposed to Greek debt. Analysts at the Royal Bank of Scotland estimate that just under half of Greek government bonds issued between 2005 and 2009 were bought by financial institutions.

French banks are the most at risk, with the highest stake in Greek debt; they account for nearly a quarter of all foreign bank loans to Greece. The conservative estimate of this figure is 27 billion euros.

Greek banks are also in trouble. They are believed to hold almost 39 billion euros worth of government bonds – close to eight percent of their total assets. A big write-down in value would be disastrous for them.

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