Norway's PM Worried About Greek Debt (Not The Norwegian 40bn Exposure)

Norway‘s Prime Minister Jens Stoltenberg is worried that the debt crisis in Eastern Europe will spread throughout the region, end might even hit Norway at some point. Separately, a survey show that Norwegian banks and insurance companies has a total exposure to the PIIGS of nearly NOK 40 billion.

“The financial crisis has become a job crisis, and a debt crisis. Both are serious. “

Jens Stoltenberg

According to Prime Minister Jens Stoltenberg the debt crisis in southern Europe may also hit Norway at st some point. “The financial crisis has become a job crisis, and a debt crisis.  Both are serious,” he says to the Norwegian newspaper Aftenposten.

“Half of what we produce is sold abroad. When any of our neighboring countries have such large debt problems, it is clear that it can affect the international economy and our ability to sell abroad,” Mr. Stoltenberg says.

“What is serious is that some of these states can be forced to tighten their fiscal policies in a period of rising unemployment and with need to increase demand. But the international financial markets may force them to make large cutbacks at some point that will reinforce the decline in their economy.”

Giving new loans to members of the euro zone will be popular among the creditors to Greece, and  European taxpayers will have to share the risk with the Greeks.

But Norway – not being a member of the European Union – this won’t be an issue, Stoltenberg reassures, and makes it clear that the Norwegian government is not considering a contribution to the European bailout package.

“It has not been an issue. Norway contributed to Island, were we felt we had a special responsibility.”

“Insignificant Exposure”

Norwegian regulators have published a statement Monday, saying that Norwegian financial institutions have low exposure to the debt problems of the so called PIIGS countries – Portugal, Ireland, Italy, Greece and Spain.

The national Finance Authority has made a survey of Norwegian financial institutions ‘exposure based on the institutions’ annual reports to the audit.

“Overall, the exposure is small. None of the institutions have  exposures of significance against Greece,” the Norwegian “Finanstilsynet” writes in their statement.

For banks and other financial institutions,  exposure to PIIGS countries only accounted for 0.12 percent of total assets at the end of 2009, according to the survey.

Exposure is greatest against Greece, but only amount to 0.09 percent of total assets. These are mainly loans to Greek shipowners, which is little influenced by domestic factors in Greece, the Financial Authority says.

For life insurance companies, the total exposure to PIIGS countries are somewhat higher – 4.0 percent of total assets.

Against Greece, the Norwegian life insurance companies short exposure is 0.11 percent of total assets is invested in Greek securities.

Life insurance companies have the greatest exposure to the Italy with NOK 12.6 billion, or 1.6 percent of total assets, mainly in bonds.

Totally, the pension funds have a risk exposure of NOK 1.9 billion against the PIIGS countries, which accounts for 1.1 percent of total assets.

Pension funds have the greatest exposure to Spain of 0.9 billion, which accounts for 0.5 percent of total assets.

In addition to direct exposure, the life insurance companies and pension funds have invested in mutual funds registered in PIIGS countries.

However, according to “Finanstilsynet” there is no direct exposure to the country through these investments.

Is 40 billion insignificant?

The Norwegian regulators have published figures that show that banks, credit companies and insurance firms has a total exposure to til PIIGS countries of NOK 40 billion.

This is based on the on-balance sheets of the mother companies in Norway as reported at the end of 2009.

Branches abroad, and new loans or possible off-balance investments, is not taken into account.

Banks and credit companies: NOK 5,43 billon

Life insurance companies: NOK 32, 588 billion


Pension Funds:NOK 1,849 billion

Grand total of (know) Norwegian exposure to the PIIGS countries: NOK 39, 867 billion.

But, hey, what’s 40 billion here and there when Norway’s  sovereign fund is worth over 2000 billion?

Oh, wait a minute!

What’s the Norwegian Oil Funds exposure here?

I’ll have to get back to you….

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