Little Greek subprime exposure

Greek banks hold an advantageous position in today’s uncertain global environment which is being shaped by the credit crisis in subprime mortgage loans, according to officials of business consultants PricewaterhouseCoopers (PWC). The real size of the problem of the credit crunch that is afflicting the international economy is expected to be fully assessed after the end of the year when balance sheets are published, PWC says. To date, only some of the consequences of the problem have come to light, and while the Bank of England puts the losses from the subprime crisis at around $100 billion, other reputable credit institutions estimate it to be more than $200 billion. Over the last month, credit institutions have realized losses of $30 billion in structured products and giants like Merrill Lynch, Citigroup and UBS have seen internal reshuffling as a result. Characteristically, Merrill Lynch’s total capitalization was at $46 billion, against $33 billion of the National Bank of Greece on November 9. Greek banks have focused their interest on expanding in promising and profitable markets abroad. As they partly depended on foreign capital markets for financing, they moved in time and managed to secure the necessary credit for the next 18-24 months before the crisis broke out. Though the cost of this financing may be slightly higher than normal, it has only a small impact on the overall profitability of banks, PWC notes.