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German exposure to our banks at €21.3bn

GERMAN banks had a €21.3bn exposure to the Irish banking system at the end of last year and were owed another €64.7bn by Irish businesses, it emerged yesterday.

Details of Germany's significant interest in the outcome of the Irish crisis comes as the Government pushes European countries to do a deal so Ireland's debt levels won't become "unsustainable".

Figures published by Germany's Bundesbank yesterday show German banks had "foreign claims" totalling €88.4bn on Irish entities at the end of last year.

Money owed by Irish banks, including cash on deposit interbank loans, and Irish bank bonds, totalled €21.3bn. The data provides no breakdown.

Germany, along with other European countries, has been vigorously opposing Ireland's efforts to enforce losses on certain categories of bank bondholders.

German banks were owed another €64.7bn by Irish enterprises, suggesting that the banks have an interest in making sure Ireland survives the economic crisis.

The final sum owed by Ireland to German banks was €2.3bn, attributed to "general government" debts.

Germany's exposure to Ireland significantly exceeds the country's €25bn exposure to stricken Greece and its €27.5bn exposure to crisis-ridden Portugal.

A separate report published by the Central Bank yesterday shows the six government-guaranteed banks have only minimal exposure to the "periphery" countries.

The amount owed to Irish banks by Portuguese entities came in at just over €1bn at the end of last year, while the exposure to Greece was just €228m.

The Irish report also shows that our banks' total "foreign claims" fell by 6.5pc to to €194bn in quarter to December 31 as institutions slimmed down their international portfolios by easing off new lending and selling loans.

A fall in amounts owed by the UK private sector accounted for €4.3bn of the €13bn drop.

News of the banks' foreign activities comes as the Central Bank prepares to reveal "draft findings" of its latest capital assessments today to the heads of the four main banks.

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