News Column

Europe's biggest banks face risk from emerging market turmoil

February 12, 2014

TIM WALLACE



INTERNATIONAL banks like Barclays and Santander are at risk from the volatility which has struck some emerging markets in recent weeks, credit ratings agency Fitch warned yesterday.


Although the risks are currently manageable, the analysts believe the danger could grow if there is contagion between more emerging and developed markets.


Groupo Santander is the most exposed, Fitch estimates.


The agency puts its exposures to the so-called fragile eight - countries including Turkey, Brazil and South Africa - at around 370 per cent of its core capital buffers.


Brazil is the main cause in this instance, as operations in the country made up 23 per cent of group profits last year.


Barclays is also exposed, mainly through its African banking operation, Absa.


The African unit gives the bank exposures of 103 per cent of its core capital, as measured by Fitch.


Unicredit's exposures, largely through Turkey and Russia, come in at 98 per cent.


However, not all large banks appear heavily exposed. The study puts HSBC's exposures at just 66 per cent of its core capital buffer, and Standard Chartered's at a similar level.


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Source: City A.M. (UK)


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