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Bank exposure to Greek sovereign debt causes concern

There is growing concern within credit markets as a number of worldwide banks have stepped forward to confirm their massive exposure to Greece. Billions upon billions of dollars worth of Greek national debt have been confirmed by many banks around the world with a growing number of analysts almost certain that the Athens government will soon default on its financial obligations.

As a consequence of these fears of default we are seeing an increase in bank insurance charges which is costing many banks a significant amount of money. This comes at a time when banking capital is in short supply with many banks around the world only just beginning to get themselves back on their feet. It is not the fact that large losses would be triggered in the event of the Greek government defaulting on sovereign debt but the knock on effect this would have to other areas of the debt market.

Despite the fact that headlines would seem to suggest that the Greek bailout package is ready and waiting it has yet to be rubber stamped by the EU. Even though this should happen almost immediately, with Germany and France already indicating their support, it is this never ending delay which is causing more damage in the minds of investors.

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