Highlighting a key reason why the Germans have dug in with their position on Greece that they don’t want to continue to bail them out further, they seem comfortable with their own banks exposure to Greece. Credit rating agency Fitch in a note today just published is saying “that it does not currently envisage any rating action on German banks as a direct result of their exposure to Greece…In addition, most German banks have limited exposure to any risk relating to Portugal and Ireland.” They do though have this caveat, “The agency sees high potential contagion risks if there were any restructuring of Greek sovereign debt.” Now granted we have to take commentary from a rating agency with a clear grain of salt but it does recognize that if this debt crisis is ring fenced around Greece, Ireland and Portugal, the region can get by BUT if it spreads to Spain and/or Italy, as has been discussed ad infinitum and is a very distinct possibility, we’ll have a major problem.
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