Colin Barr

Following the money in banking, economics, and Washington

PIIGS won't eat BofA

May 7, 2010: 2:32 PM ET

The bank outlines modest exposure to the European debt crisis.

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Tragically, people are sometimes killed by pigs. It's not a moment too soon, then, that a filing Friday shows the PIIGS pose little threat to the health of the Bank of America (BAC).

The PIIGS, of course, are the increasingly troubled European nations of Portugal, Ireland, Italy, Greece and Spain. Investors are betting it's more likely than not that Greece, which has the most acute financial problems, will default on its debt within five years, and doubts about relatively more robust Spain and Italy have been on the rise as well this week.

BofA's quarterly filing with regulators shows, at page 159, that the bank had $3 billion of exposure to the sovereign debt of the five countries. That's not much on a $2 trillion balance sheet, though BofA stressed that a sovereign meltdown could easily wipe out investments in private assets as well.

"Risks from the potential debt crisis in Europe could result in a disruption of the financial markets which could have a detrimental impact on the global economic recovery including the impact on non-sovereign debt in these countries," the company said.

All told, BofA had $22.5 billion of exposure to the five troubled countries as of March 31. That includes $4.4 billion of loans, $4.3 billion of derivatives and $9 billion of securities and resale agreements.

The bank also has $53.3 billion of exposure to emerging markets around the world, the filing shows, including $12 billion in China, $9 billion in Brazil and $8 billion in India.

For whatever reason, the filing doesn't seem to outline BofA's two biggest exposures to foreign countries -- both of which have been struggling with debt issues of their own, if not to the same degree as the PIIGS.

BofA has $58 billion of outstanding loans and derivatives claims on the U.K. and $27 billion on Japan, according to a year-end filing with the Federal Financial Institution Examinations Council.

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Colin Barr
Colin Barr
Senior Writer, Fortune

Colin Barr has covered finance for Fortune.com since November 2007. Previously he was a writer and editor for TheStreet.com, winning a 2006 Society of American Business Editors and Writers award for "The Five Dumbest Things on Wall Street," and for Dow Jones Newswires. He is a 1991 graduate of Penn State and lives in Port Washington, N.Y., with his wife Meena Bose and their two kids.

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