The Slog can reveal this afternoon that Barclay’s exposure to Italian sovereign debt miraculously leapt nearly tenfold from around £790 million during the banking stress tests to a staggering £8.6 billion just two months later. And the RBS exposure to Spanish debt doubled to £1.6 million.
The U.K.’s three largest banks provided investors with data showing their sovereign-debt holdings for heavily indebted countries such as Greece, Ireland, Portugal, Italy and Spain as of June 30. But these disclosures varied widely from the data released as part of the stress tests two weeks earlier.
For example, leading UK Bank Barclays earned the highest marks of any bank in the EU tests. It reported in the stress tests that it was holding £787 million of Italian sovereign debt. But more recent disclosures dating to June 30 show that Italian sovereign-debt holdings had ballooned to £8.6 billion – and the bank’s Spanish sovereign-debt holdings were up by half from March 31 to £6.4 billion on June 30.
RBS’s Spanish government-debt portfolio roughly doubled from March 31 to £1.6 billion on June 30. Because it is not part of the EU, RBS did not have to declare its Vodka Palace and property loans; but the Slog understands from insiders that the amounts are both massive and toxic.
Some eurozone banks aren’t providing updated sovereign-debt details at all. Others are using different methodologies to calculate their exposures in a way that is inconsistent with the stress-test process. That has produced wild swings in several major banks’ reported debt holdings—and the banks aren’t clearly detailing the changes.
Among banks not providing sovereign-debt data (and previously fingered by Slog sources as ‘at grave risk’) are France’s BNP Paribas SA; and Société Générale SA, whose exposures to Europe’s periphery have especially unnerved markets, currency traders and credit agencies.





