Here’s Who’s Getting Pounded When Greek Debt Holders Take Their Haircut

Carla Bruni

S&P cut Greece’s ratings today to BB+ and B triggering a sell off in European indices prior to close.

Greek contagion has led to the downgrade of Portugal, and rising credit difficulties for banks throughout the PIIGS states in Europe.

The expectation is that holders of Greek debt will end up taking a massive haircut — possibly 50% or more.

With Greece creeping towards a default, due to Germany’s unwillingness to support the country, we thought we’d revisit again who is going to lose the most in that scenario.

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[slide
permalink=”french-banks-represent-over-25-of-claims-1″
title=”French banks represent over 25% of claims”
content=”Source: Citigroup
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[slide
permalink=”banks-swiss-banks-represent-over-20-of-claims-2″
title=”Banks: Swiss banks represent over 20% of claims”
content=”Source: Citigroup
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[slide
permalink=”german-banks-represent-close-to-15-of-claims-3″
title=”German banks represent close to 15% of claims”
content=”Source: Citigroup
image=”http://static.businessinsider.com/image/4b4f09610000000000bdde32/image.jpg”
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[slide
permalink=”us-banks-represent-just-above-5-of-claims-4″
title=”U.S. banks represent just above 5% of claims”
content=”Source: Citigroup
image=”http://static.businessinsider.com/image/4accfc4a000000000056cf89/image.jpg”
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[slide
permalink=”uk-banks-represent-about-3-of-claims-5″
title=”U.K. banks represent about 3% of claims”
content=”Source: Citigroup
image=”http://static.businessinsider.com/image/4b4605c300000000009b263c/image.jpg”
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[slide
permalink=”basically-this-is-european-problem-6″
title=”Basically, this is European problem.”
content=”Citi: 80% of Greek debt claims are on European banks. This is a European problem.”
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[slide
permalink=”overall-the-risk-trade-will-be-clobbered-7″
title=”Overall, the risk trade will be clobbered.”
content=”JP Morgan: There will be a flight to US treasuries and yields will fall there as a result of renewed risk aversion. This will widen spreads on high grade corporate bonds as a result.”
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[slide
permalink=”other-countries-dependent-on-the-imf-will-be-hurt-8″
title=”Other countries dependent on the IMF will be hurt.”
content=”Wells Fargo: If IMF has to act on Greece and its neighbours, particularly Spain, its could be hindered in acting in other crisis around the world as it will use up too much of its capital.”
image=”http://static.businessinsider.com/image/4b72f1aa0000000000c4e32b/image.jpg”
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[slide
permalink=”insurance-several-insurance-companies-have-the-potential-for-contagion-risk-9″
title=”Insurance: Several insurance companies have the potential for contagion risk”
content=”Morgan Stanley: There are only a few businesses heavily exposed to one of Greece, Spain, or Portugal, but they include MapFre and Fortis.”
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[slide
permalink=”insurance-fortis-has-significant-exposure-to-greece-portugal-and-italy-10″
title=”Insurance: Fortis has significant exposure to Greece, Portugal, and Italy”
content=”Morgan Stanley: 39% of Fortis’ tangible book value is exposed in Greece, 25% in Portugal, and 69% in Italy.”
image=”http://static.businessinsider.com/image/4b7317f9000000000082b0b1/image.jpg”
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[slide
permalink=”insurance-mapfre-has-notable-exposure-to-spain-11″
title=”Insurance: MapFre has notable exposure to Spain”
content=”Morgan Stanley: MapFre has 4 billion Euros of exposure to Spanish government bonds.”
image=”http://static.businessinsider.com/image/4b7317e900000000005bb870/image.jpg”
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[slide
permalink=”insurance-potential-contagion-risks-for-giants-12″
title=”Insurance: Potential contagion risks for giants”
content=”Morgan Stanley: While not over exposed to Greece or any of the PIIGs, several of the insurance giants have positions in each country which could become difficult if crisis was to spread throughout the debt troubled states after a Greek default or rescue. This is, however, unlikely.”
image=”http://static.businessinsider.com/image/4b72ffbf0000000000e39619/image.jpg”
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[slide
permalink=”euro-greece-is-driving-down-the-value-of-the-euro-13″
title=”Euro: Greece is driving down the value of the Euro”
content=”Morgan Stanley: Short the Euro against the Dollar, as the US moves towards a more stringent economic policy and the Euro zone experiences several potential bailouts.”
image=”http://static.businessinsider.com/image/4b72f1cc00000000000dccf3/image.jpg”
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[slide
permalink=”other-countries-will-have-a-much-harder-time-entering-the-euro-14″
title=”Other countries will have a much harder time entering the Euro.”
content=”Morgan Stanley: The Greek crisis will make the EMU much more concerned about who they let into the Euro zone in the future. They will start to check more economic criteria, such as external imbalances and budget positions.”
image=”http://static.businessinsider.com/image/4afd70480000000000f9cdd0/image.jpg”
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[slide
permalink=”ecb-no-rate-hike-likely-with-potential-inflationary-risks-as-a-result-15″
title=”ECB: No rate hike likely, with potential inflationary risks as a result”
content=”Morgan Stanley: With the German economy stalled and threats like Greece existing on the periphery an ECB rate hike is now increasingly unlikely, perhaps for the whole of 2010.”
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[slide
permalink=”bulgaria-and-romania-will-get-slammed-by-a-pullback-in-greek-lending-16″
title=”Bulgaria and Romania will get slammed by a pullback in Greek lending.”
content=”Morgan Stanley: Bulgaria and Romania rely on Greek banks for a large amount of lending, much of which will be cut back in a Greek collapse due to a reliance on government loans. Reliance will shift towards local deposits as a source of lending, and those economies are weak already.”
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[slide
permalink=”macedonia-and-albania-will-be-hit-too-17″
title=”Macedonia, and Albania will be hit too”
content=”Morgan Stanley: When the Greek economy slides, foreign workers from Albania and Bulgaria may lose jobs and stop sending home remittances. Also, FDI to Macedonia (7% of its GDP) and Bulgaria (8% of GDP) will decrease.”
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[slide
permalink=”extreme-tail-risk-complete-greek-bank-retrenchment-crushes-central-eastern-europe-18″
title=”Extreme Tail Risk: Complete Greek Bank retrenchment crushes Central Eastern Europe”
content=”Morgan Stanley: Extreme tail risk scenario points to complete retrenchment by Greek banks from all Central Eastern European markets which results in their loan books not being rolled over to their local subsidiaries.

Could spark a credit crisis in countries like Romania and Bulgaria, where 25% and 45% of the respective country’s loans come from.”
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[slide
permalink=”wonder-how-greece-got-here-check-out-how-bad-the-countrys-pension-system-is-19″
title=”Wonder how Greece got here? Check out how bad the country’s pension system is”
content=”See just how much the Greeks overspend on pensions >
image=”http://static.businessinsider.com/image/4bd6f1ac7f8b9ad539860000/image.jpg”
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