According to the Estonian news paper Äripäev, the Swedish bank Swedbank recently invested 185 million kroons or 5% of its assets in Greek bonds , another 5% in Italian bonds and 15% in Lithuanian government bonds through its Baltic pension fund.
“A number of large European banks have built up significant positions in Greek government bonds which means that they play an important role in ensuring European banking stability.”
In spite of problems in the Greek economy, some Estonian pension funds purchased Greek government bond as recently as last month, the news paper report.
Swedbanks Baltic daughter bank, Hansabank, accounts for half of the market for second-pillar pension funds in the region.
Agnes Makk, head of Swedbank’s investment fund division, explains that the fund purchased Greek bonds at the end of January when they carried 7% interest rate.
Makk says that there were three reasons why Swedbank invested in Greek bonds: Firstly, Greece has limited short-term liquidity risk in budget financing since only a small amount of government bonds are redeemed this year.
Secondly, a number of large European banks have built up significant positions in Greek government bonds which means that they play an important role in ensuring European banking stability and mean that there could be rescue packages available.
Third reason is that Greece government has recently focused on resolving its budget problems.
Such positive opinion is not shared by SEB whose fund manager Vahur Madisson explains that the confidence of financial markets toward Greece continues to erode and it is not clear what will happen if Greece were to default.
“We made our first and last investment in Greek bonds last November and sold it in two months,” said Madisson.
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