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Thursday, April 29, 2010

$60 bln Greek debt vanish..

Swiss banks' exposure to Greece dropped to $3.6 billion from $64 billion in the three months to December, and this time it's not wayward Greek statisticians' fault.

The whopping, yet mystifying drop in foreign claims on Greek borrowers shows up in the Bank for International Settlements' quarterly banking statistics, 104 pages of endless number columns that chart global banks' international exposures.

The most recent data, which are up to date as of December 2009, were published last week. When analysts turned to the file to assess the possible damage of a Greek debt restructuring after Tuesday's S&P ratings downgrade, some were puzzled by the massive change.

None of the parties involved in compiling the statistics agreed to go on the record, but several officials confirmed that the change in the Swiss exposure was due to a reclassification of Greek bank EFG Eurobank.

The BIS statistics show claims based on the nationality of the lender's "ultimate owner".

EFG, Greece's No. 3 bank by assets, is controlled by Greek billionaire Spiros Latsis via a holding company, which until last year was based in Geneva and has since moved to Luxembourg.

So it came that EFG's Greek loans were, in the eyes of the BIS statistics, an exposure of a Swiss bank, thus inflating by a factor of 15 a number that at the new level of $3.6 billion reflect better what "real" Swiss banks hold in Greek debt.

In Luxembourg, however, EFG's holding company.

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