Bove: European Debt Crisis Only a Risk to Citi, JPMorgan
Rochdale Securities' analyst Richard Bove said fears of a possible impact of a European debt crisis on U.S. banks were overblown, with only Citigroup and JP Morgan Chase having a significant exposure to the crisis.
"Assuming some relatively worse case developments, it appears that Citigroup and JP Morgan Chase are at risk to the developments in Europe. No other American institution is," Bove wrote in a note.
Citing the filings from the International Financial Statistics Yearbook, released by the International Monetary Fund for the year 2010, Bove said Citigroup is at biggest risk with exposure of $12.3 billion in Italy and $10.8 billion in Spain.
JP Morgan Chase risks write downs on the $18.8 billion it loaned to Ireland, $12.2 billion to Italy and $12 billion to Spain, according to the filings.
The brokerage ruled out any risks from limited exposure to either Goldman Sachs , or Morgan Stanley and termed the exposure amount "not significant."
"The declines in the bank stock prices based on fears in this area (due to fear of financial crisis in Europe) seem to be meaningfully overdone," Richard Bove said.