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Deutsche Bank analysts see the emerging-market risk as a concentrated riskto specific banks rather than a broadly-based risk to the entire Europeanbanking sector.
About $3.3 trillion of emerging-market (EM) assets are exposed withinEuropean banks, of which about 85 percent is contained within the listed ones,Deutsche Bank analysts write in a report, saying that about $1.7 trillion assetsare contained within just a few banks.
"Although the rest of the risk is spread over a large number of names, theBasel III-inspired rebuild of balance sheets has led to a rough doubling oftangible book value since the trough, providing a powerful shock absorber forthe majority," the analysts say.
They write that the most-exposed banks are Erste, with theemerging market loans representing 483 percent of the bank's tangible book value(TBV). Other banks exposed to the emerging market include Santander, at313 percent of TBV, BBVA, at 221 percent, Standard Chartered,at 321 percent and Unicredit, at 207 percent.
When looking at earnings rather than loans, the EM exposure of Commerzbank and KBC is 32 percent and 42 percent respectively, for 2014estimated net profits.
The analysts say strong domestic banking franchises such as Intesa,Lloyds and Nordea would be resilient to an emerging marketshock.
Reuters messaging rm://atul.prakash.thomsonreuters.com@reuters.net
