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Europe’s banks bleed from Greek crisis

From France to Germany, Britain to Belgium, some of the region’s biggest banks lined up to reveal billions of euros lost through writedowns on Greek loans. “We are in the worst economic crisis since 1929,” Credit Agricole chief executive Jean-Paul Chifflet said.

Credit Agricole reported a record quarterly net loss of €3.07 billion ($4.06 billion), performing worse than expected from the cost of shrinking its balance sheet and after a €220 million charge on its Greek debt.

Britain’s Royal Bank of Scotland has marked its Greek bonds at a 79 per cent loss — or £1.1 billion — for 2011. The state-owned bank posted a fourth quarter loss of nearly £2 billion on Thursday.

Problems in Europe’s banking sector are far wider than Greece, however. Germany’s Commerzbank, whose fourth-quarter earnings were spoiled by a €700 million hit on Greek sovereign debt, needs to find €5.3 billion to meet the stringent new capital requirements set by Europe’s banking regulator. It has now lost more than €2 billion on its Greek bonds.

Commerzbank said it could reduce some of its shortfall by shedding risky assets, though the debt crisis still had the potential to disrupt earnings.

Bailed out Franco-Belgian bank Dexia warned on Thursday it risked going out of business. It suffered a 2011 net loss of €11.6 billion, hit by its break-up and exposure to Greek debt and other toxic assets such as US mortgage-backed securities. Dexia booked a €3.4 billion loss on its holding of Greek sovereign bonds. French investment bank Natixis reported a milder-than-expected 32 per cent decline in quarterly profits. Despite the weak results, banks still found room for bonuses. —