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Thomas Humblot, Research Analyst at BNP Paribas, points out that with the exception of Italian and Portuguese banking systems, the main eurozone banking systems have reduced their exposure to sovereign debt between July 2017 and July 2018.

Key Quotes

“The exposure of the eurozone banking system as a whole has decreased from 5.1% of banking assets to 4.8% over the same period.”

“Most of the banking systems have reduced their global exposure to sovereign debt, especially towards domestic debt securities but less towards those of other Member States. Greek and, to a lesser extent, Spanish banks have decreased their exposure towards domestic sovereign debt. However, they also have increased their exposure towards sovereign debt of other Member States.”

“Portuguese and Irish banking systems focused their buying on debt securities issued by other Members States. Finally, if Italian banks have, like Portuguese banks, increased their global exposure, their buying of domestic debt securities has grown more than twice as strong as their buying of sovereign debt of other Member States.”