UK banks have around £12bn tied up in Greece, sparking fears they may face losses if the nation’s banks default following the latest election results.
Figures from the Bank of International Settlements show UK banks have lent £8.9bn to Greek banks, customers and businesses, the Daily Mail reports.
But another report from Swiss watchdog said they may have a further £3.1bn tied in with Greek lenders, including overdrafts and credit cards which have so far not been used.
Fears over the UK financial industry’s exposure to Greece follow the win of the left-wing Syriza party in the Greek election on Sunday, which throws into question the future of the eurozone economy and its bailout package.
The winning party is looking to write off half of the country’s debt to its creditors – the ECB, the European Commission and the International Monetary Fund, which is likely to spark extended negotiations.
However, the UK regulator has said the exposure to Greek banks is spread across the financial system, with no one bank bearing the brunt.
UK banks have been reducing exposure to Greece, as well as other PIGS countries – Portugal, Ireland and Spain – as the economic situation in these regions has deteriorated. For example, Barclays has cut exposure to Greece to just £74m.
Earlier this month, Bank of England governor Mark Carney said the UK’s major banks have “very little direct exposure” to Greece, so the impact of the election result on the UK would be muted.