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Equity Analysis and News

  • FT report that the Eurozone Chief Watchdog are concerns over EU banks’ exposure to Lira
  • Among most exposed banks are BBVA and UniCredit

European Banks Hit on Exposure to Falling Turkish Lira

A report this morning from the FT stated that in light of the fall in the Turkish Lira, the Eurozone’s Chief Financial Watchdog has grown concerned over the how exposed several European banks are. Consequently, European bourses have been dragged lower by banking names today with the STOXX Europe bank index posting losses of 2.9%.

Most Exposed Banks

Among the most exposed banks to Turkey, BBVA tops the list, shares are lower by over 5.5% amid todays near 20% plunge in the Turkish Lira as the bank derives a third of their pre-tax profits from the country. UniCredit shares have dropped as much as 6%, briefly hitting limit down given their hefty exposure to Turkey, the lender recently stated that it would absorb the FX impact with its own reserves when asked whether they would write down the EUR 2.5bln investment in Turkey’s Yapi Kredi bank.

Elsewhere, data compiled by the Bank for International Settlements showed that Turkish borrowers owe Spanish banks $83.3bln, French banks $38.4bln and Italian banks $17bln.

European Banks Dragged Lower Amid Exposure to Turkish Lira

Source: Thomson Reuters

Stoxx 600 vs. Stoxx Europe Bank Index

European Banks Dragged Lower Amid Exposure to Turkish Lira

--- Written by Justin McQueen, Market Analyst

To contact Justin, email him at Justin.mcqueen@ig.com

Follow Justin on Twitter @JMcQueenFX