NY Times' Dealbook reports that…with the European financial crisis still threatening a trail of defaults, United States banks are betting that their insurance is going to pay out.
Five large American banks, including JPMorgan Chase and Goldman Sachs, have more than $80 billion of exposure to Italy, Spain, Portugal, Ireland and Greece, the most economically stressed nations in the euro currency zone, according to a New York Times analysis of the banks’ financial disclosures. But these banks have made extensive use of a type of financial insurance, the credit-default swap, to help them offset any losses that might occur if defaults swamped the five troubled nations.
Using these swaps, along with other measures, the five banks have cut their theoretical exposure to the troubled countries by $30 billion, to $50 billion. The analysis also shows that Citigroup has the greatest percentage of its exposure potentially protected, at 47 percent, while Bank of America has bought the least protection, at 12 percent…
Find out more at http://dealbook.nytimes.com/2012/01/29/u-s-banks-tally-their-exposure-to-europes-debt-maelstrom/?pagemode=print
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