Italy crisis to affect French banks?

13 July 2011

French banks could find them at considerable risk should the euro region debt crisis continue to affect Italy.

BNP Paribas and Credit Agricole are among the lenders that could feel the after-effects of debt infection of the largest borrower in Europe, Bloomberg reports.

According to data from the Bank of International Settlements, French institutions held $392.6 billion in Italian private and government debt at the end of 2010.

This amount was around double the sums held by German bodies and greater than any other foreign nation.

Julian Chillingworth from Rathbone Brothers described the French lenders as being "on the frontline".

"French banks like BNP Paribas have taken substantial positions in Italy when the market opened up to foreign players and now they face the downside," he added.

Concerns about the financial position of Italy have emerged following warnings from Standard & Poor's and Moody's Investors Service regarding the country's ability to finance its debt.

By Tony Aynsley

Become a bobsguide member to access the following

1. Unrestricted access to bobsguide
2. Send a proposal request
3. Insights delivered daily to your inbox
4. Career development