Business Irish

Wednesday 22 November 2017

Largest banks in America cut exposure to Ireland by up to $1bn

Peter Flanagan

Peter Flanagan

SOME of the largest banks in the world have cut their exposure to Ireland by almost a billion dollars since the start of the year, as big investors move away from this country.

Latest filings in the US show Goldman Sachs and Bank of America cut the amounts they have invested in Irish-related securities by at least $800m (€622m) between the end of last year and March 31; while JP Morgan's Irish investments are now so small they are bundled in with Greece and Portugal.

Given the problems in Europe, several American banks have made a point of highlighting their exposure to a number of European countries that have been deemed high risk, including Greece, Ireland, Portugal, Spain and Italy.

According to their '10Q' quarterly filing to the Securities and Exchange Commission, Goldman Sachs reduced its exposure to Ireland by $479m during the first three months of the year. The bank had market exposure to Ireland worth $192m on March 31, compared to $671m at the end of 2011.

The bank, which had become the 'poster boy' for Wall Street excess during the downturn, is short Irish sovereign debt to the tune of $371m, mainly through the use of credit default swaps (CDS) -- a form of insurance -- worth $335m.

That short almost cancels out the $563m it has in 'non-sovereign' exposure, which includes $535m in corporate bonds and $100m in related equities. The bank has used swaps to hedge $72m worth of those investments.

Bank of America-Merrill Lynch reduced its Irish-related holdings by $321m in the first quarter, and now could lose a maximum of $2.09bn if its Irish-related investments go wrong. It has cut its exposure by over $1bn since the start of 2010.

In contrast, Morgan Stanley increased its bets on Ireland, upping its investment here from $223m in December to $264m now.

Irish Independent

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