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HSBC's total exposure to Greece is said to be US$7.3 billion, far higher than that of other banks based in Britain. Photo: EPA

HSBC direct exposure to Greece highest among peers

Don Weinland

How much is too much direct banking exposure to Greece as the country closes down its banks?

HSBC had the highest among its peers but analysts said the indirect exposure to fallout from a Greek exit from the euro zone was likely the greater worry for the bank.

HSBC's total exposure to Greece was US$7.3 billion, or about 4.5 per cent of tangible net assets, according to figures compiled by Sanford C. Bernstein.

Among British peers, it was the only bank with a "material" exposure to the country, which shuttered banks, starting on Monday, in the hope of averting bank runs and a full-fledged crisis.

At a distant second place, Royal Bank of Scotland had about US$369 million in assets in Greece. Standard Chartered had almost no assets in the country.

Most of HSBC's exposure was to other global banks doing business in Greece and presented little currency risk.

About 27 per cent was corporate exposure and 14 per cent was retail. The data was from 2013, Bernstein noted, and most short-duration exposures to other banks were probably cut in the past few months.

Other media reported that the bank now had about US$6 billion in assets in Greece.

The bank said on Monday that it was monitoring the situation in Greece.

Investors in Hong Kong have found HSBC's Greek and European exposures too high.

The bank's shares fell 0.14 per cent yesterday to HK$70.15 after tumbling more than 2.2 per cent on Monday.

The drop in its share price followed the dissolution of talks between the Greek government, the International Monetary Fund and the European Union and the country's central bank over the weekend.

Failure to make a €1.6 billion (HK$13.8 billion) payment to the International Monetary Fund, due this morning Hong Kong time, could push the country closer to an exit from the euro zone.

Analysts said HSBC's exposure to the fallout in Europe from a Greek default was much greater than the direct exposure that still remained in Greece.

"The direct exposure is not particularly significant," said Gary Greenwood, a banks analyst at Shore Capital Group.

"It's more about indirect exposure to markets in Europe."

This article appeared in the South China Morning Post print edition as: HSBC bracing for fallout from Greece crisis
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