German Banks Top French on $23 Billion Greek Debt, BIS Says

June 6 (Bloomberg) -- German lenders were the biggest

foreign owners of Greek government bonds with $22.7 billion in

holdings last year, making them a likely negotiation partner in

burden-sharing deals for the country, data from the Bank for

International Settlements showed.

     French banks, which led the group of Greek creditors with

overall claims amounting to $56.7 billion, trailed their German

peers on sovereign debt with $15 billion, according to the June

report from the Basel, Switzerland-based BIS. The overall figure

for French banks was inflated by $39.6 billion in lending to

companies and households, mainly because of Credit Agricole SA’s

Greek unit, Emporiki Bank SA. German lenders have no major units

in the country.

     At the end of 2010, Greek government bonds held by banks in

countries reporting to the BIS totaled $54.2 billion, of which

96 percent was owned by European lenders. Germany and France,

which accounted for 69 percent, may be asked to weigh in when

the European Union goes ahead with plans to win Greece creditors

to roll over their debt in a “Vienna-style” program.

     “Implementing an approach similar to the Vienna Initiative

would demonstrate private sector involvement has been

explored,” Justin Knight, a European rates strategist at UBS AG

in London, wrote in a note last week. This may make voters

“more amenable to the idea that public sector funds need to be

deployed going forward,” he said.

                        Banks’ Holdings

     European officials are preparing a new aid package for

Greece that includes a “voluntary” role for investors after

the EU and the International Monetary Fund approved the fifth

installment of Greece’s 110 billion-euro ($161 billion) bailout

last week.

     Among the largest disclosed holdings of Greek government

bonds by non-Greek European banks are BNP Paribas SA’s 5 billion

euros, Dexia SA’s 3.5 billion euros, Commerzbank AG’s 3 billion

euros, Societe Generale SA’s 2.7 billion euros, ING Groep NV’s

2.4 billion euros and Deutsche Bank AG’s 1.6 billion euros,

Goldman Sachs Group Inc. said in a research note published last

month.

     “We have long argued that the holdings of Greek government

debt are fairly concentrated,” Barclays Capital analysts, led

by Sherif Hamid, wrote in a note June 3. “The top 30 holders

likely account for roughly two-thirds of the debt, and this

should make it easier to negotiate and achieve a decent success

rate on any restructuring.”

                        340 Billion Euros

     Greece’s total debt is 340 billion euros, according to data

compiled by Bloomberg. The 7.4 billion euros in Greek government

bonds held by FMS Wertmanagement GmbH, which is winding down

assets of Germany’s Hypo Real Estate Holdings AG, weren’t

included in the BIS figures because FMS isn’t a bank. Neither

were the European Central Bank’s holdings, estimated at 50

billion euros by Citigroup Inc. Greek banks own about 60 billion

euros of the country’s debt, according to Goldman Sachs.

     The breakdown of exposure by debtor category, released in

detail for the first time by the BIS, showed differences among

creditors’ exposure to Greece and other nations.

     The new data showed that the structure of debt and the

holdings are different in Portugal and Ireland, the other two

euro-area countries that received emergency loans from the EU

and the IMF.

     Overall foreign claims on Ireland, which has about half

Greece’s gross domestic product, were three times as high as

those on Greece, totaling $462.3 billion, according to the BIS.

                        Ireland, Portugal

     Sovereign debt accounted for 4 percent of the Irish total,

compared with 37 percent in Greece. Three-quarters was lending

to companies and households, especially by British banks, whose

claims amounted to $112.4 billion. Irish banks borrowed $85.1

billion internationally, with German banks also being the

biggest lenders.

     Portugal’s government owed $34.6 billion mostly to banks in

Spain, Germany and France, with each of the countries accounting

for about a quarter of the total. Spanish banks provided more

than half of the $124.4 billion in lending to Portuguese

companies and households.