Enter multiple symbols separated by commas

US Banks' Exposure to Europe Is 'Manageable': Bernanke

While a recent report showed that U.S. financial companies have nearly $200 billion in net exposure to Greece, Ireland, and Portugal, the amount is "manageable relative to their capital," according to a July 14 letter Federal Reserve Chairman Ben Bernanke wrote to members of Congress.


Bernanke warned, however, that "a sovereign credit event in the region could affect a broad range of markets and financial institutions," including those outside of Europe.

Bernanke's letter came in response to an inquiry from Sen. Corker (R.-Tenn.) and Sen. Tom Coburn (R.-Okla.), who had expressed concern over the exposure of U.S. banks, and the American economy, to a potential default by one or more of the European countries.

The letter, obtained by CNBC Tuesday, said that most of the $200 billion comes in the form of credit-default swaps (CDS)sold by financial institutions on the debt of those countries. The amount doesn't take into account purchases by the banks themselves of debt protection against default, Bernanke wrote.

Confidential CDS data from the Depository Trust & Clearing Corporation's Trade Information Warehouse show that when CDS protection—both sold by banks and purchased by them—is taken into account, "the net exposures of the U.S. financial institutions to Greece, Ireland, and Portugal from CDS are quite small," the letter said.


  • JPMorgan Chase headquarters building

    JPMorgan Chase will cut about 5,000 jobs over the next year, as the bank closes branches and slims down operations, The Wall Street Journal reported.

  • EU banks still trailing behind US: CIO

    Jonathan Bell, chief investment officer at Stanhope Capital, says that while European banks are trailing behind their U.S. counterparts, they have potential for credit expansion in the near future.

  • Maybank CFO: Expect slower loan growth this year

    Mohamed Rafique Merican, CFO of Maybank Group, says factors such as weaker commodity prices and the implementation of the goods and services tax will weigh on loan growth this year.