A review of Israeli banks' financial reports shows that during the second quarter they reduced their exposure to the troubled economies of Portugal, Ireland, Greece, and Spain (together called the PIGS countries).
Israel's five largest banks together ended the second quarter with NIS 2.6 billion in exposure to the PIGS economies, less than half a percentage point of business credit. About one-fifth of the total is off-balance sheet exposure (foreign trade guarantees).
At the end of the first quarter the banks' exposure was NIS 3 billion.
The banks, except for Israel Discount Bank (TASE: DSCT) and Mizrahi Tefahot Bank (TASE:MZTF), give a breakout per country. Total exposure to Spain was NIS 1.35 billion, to Ireland was NIS 819 million, to Greece was NIS 26 million, and to Portugal was NIS 16 million.
The PIGS countries have been considered risky recently, with large external debt raising concerns about their economic stability.
In May, Supervisor of Banks Rony Hizkiyahu ordered the banks to fully disclose their exposure to those countries.
Bank Hapoalim (TASE: POLI) has the largest exposure, with NIS 1.26 billion, up NIS 271 million from the first quarter. NIS 686 million was to Spain and NIS 573 million was to Ireland. NIS 26 million of the exposure to Ireland was considered problematic debt.
Bank Leumi (TASE: LUMI) had a total exposure of NIS 739 million, of which NIS 512 million was to Spain. Leumi had NIS 204 million in exposure to Ireland, most of it government debt. Leumi ended the first quarter with NIS 1.07 billion in exposure to PIGS countries, but reduced it considerably.
Israel Discount Bank (TASE: DSCT) reported NIS 259 million in exposure, of which NIS 25 was considered problematic debt.
Discount Bank has the highest exposure to Greece, at NIS 15 million. It did not break out its exposure to other countries.
Mizrahi Bank had NIS 172 million in exposure to PIGS countries.
First International Bank of Israel (TASE: FTIN1;FTIN5) had NIS 192 million in overall exposure. NIS 150 million was to Spain, including NIS 82 million in Spanish government securities.
Published by Globes [online], Israel business news - www.globes-online.com - on September 27, 2010
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