Want evidence that the consequences of the European debt crisis extend far beyond debt-laden Ireland, Greece, Portugal, Italy, and Spain? Look no further than France's three largest banks--BNP Paribas, Société Générale and Crédit Agricole--which hold nearly $57 billion in Greek debt compared with $34 billion held by the largest German banks and $14 billion at British banks. That's not an enviable position to be in at a time when Greece is failing to meet its fiscal targets, sparking renewed fears of a Greek default. In a Wall Street Journal op-ed on Tuesday, Nicolas Lecaussin, the director of development at France's Institute for Economic and Fiscal Research stated that concerns about the exposure of French banks to Greek debt have gotten so bad that BNP can no longer borrow in dollars, according to an anonymous bank executive.
BNP has subsequently denied Lecaussin's bombshell report, claiming it is able to fund itself in dollars at normal levels both "directly and through foreign-exchange swaps." This statement, plus Société Générale's assurances today that the bank isn't dangerously exposed to European sovereign debt and can withstand a freeze in dollar financing from U.S. money-market funds, has enabled both banks to rebound in trading after incurring substantial losses.