French Banks Are Most Exposed to Greek Crisis

French banks are the most exposed in Europe to the Greek debt crisis, with $75 billion at stake, according to the Bank of International Settlements.

The Bank of International Settlements estimates the $75 billion figure accounts for around 25 percent of total foreign claims as of the end of the third quarter 2009.

Switzerland was heavily exposed, with 21 percent of claims as of the third quarter of 2009, but has since dramatically shrunk its exposure and it now stands at around $3.6 billion.

German banks are estimated to have 14 percent of the total foreign claims, the USA 5 percent and the UK 4 percent.

Credit Suisse analysts point out though that a lack of disclosure by the French banks has added to the nervousness about what this exposure relates to.

In addition, underperformance of the sector has accelerated on concerns over regulatory reforms, including changes in regulation for derivatives clearing, which have added to concerns around the sector, according to Credit Suisse analysts.

But are French stocks now presenting an attractive valuation?

"…most risks are now reflected in valuation. French banks trade at a 25 percent discount to the rest of the European banks sector on 2011 earnings multiples," according to Credit Suisse.

The Swiss bank adds that while the impact of upcoming regulatory changes is estimated to be still high, recent price movements may now make some French banks attractive.