Analysts play down German banks' Greece fallout

FRANKFURT Feb 11 (Reuters) - German financial institutions may have the third-largest exposure to Greece but are set to ride out the storm as long as the country's fiscal crisis does not spread outside its borders, analysts said.

Lenders to public-sector borrowers -- such as Commerzbank (CBKG.DE) unit Eurohypo and Hypo Real Estate [HRXGe.DE] -- as well as some landesbanks have billions of euros in exposure.

German creditors have a combined $43 billion outstanding with Greek borrowers, behind only French and Swiss lenders with $75 billion and $64 billion, respectively, data from the Bank for International Settlements (BIS) show.

Greece owes $302 billion to all foreign lenders, the most recent figures from the Bank of International Settlements (BIS) show -- half the debt Wall Street investment bank Lehman Brothers had when it collapsed, which triggered massive writedowns as the value of banks' assets plummeted.

"Of all the listed banks in Germany, Commerzbank has the biggest issue in Greece because of Eurohypo," said Merck Finck analyst Konrad Becker.

Greece and Cyprus accounted for 5 percent of Eurohypo's 70 billion euros ($96.54 billion) in state financing business in the first half of 2009.

The bulk of this 3.5 billion euro exposure is probably classified as a long-term holding, Equinet analyst Philipp Haessler said, which means its value would need to be adjusted only in the unlikely event that interest payments were missed.

Volatile prices for Greek sovereign debt were not set to have an impact.

"We do not expect hits to emerge in the first quarter," Commerzbank Becker said.

Hypo Real Estate, which the German government had to nationalise last year to avoid a collapse, is vulnerable to Greece via its Deutsche Pfandbriefbank unit.

Greek bonds account for 4 billion euros of the unit's collateral pool, a spokesman said. He said the bank's overall exposure was larger but gave no more details.

German banks in the pfandbrief -- or covered bond -- segment, which include landesbanks and Deutsche Postbank (DPBGn.DE), hold a total of nearly 15 billion euros in Greek securities.

Flagship German lender Deutsche Bank (DBKGn.DE) has a "relatively small" exposure to Greece, Chief Executive Josef Ackermann said last week.

German insurer Allianz (ALVG.DE) has about 3.6 billion euros worth of exposure to Greece and Munich Re (MUVGn.DE) another 1.5 billion, according to JP Morgan.

Still, insurers normally hold such bonds until maturity so would not have to mark them down as long as interest payments continue.

"It would only get serious for German financial institutions if the crisis would spread to other countries such as Spain," said Equinet's Haessler.

Some analysts have mentioned Spain as one of several countries struggling with high debt that could also find itself in trouble.

Greece's economy is smaller than that in the southern German state of Bavaria and its banking system does not play a large international role. German exposure to Spain, in contrast, is six times bigger than lending to Greek borrowers.

"If the Spaniards get into trouble then the fallout from the Lehmann collapse will look like peanuts," said one analyst who asked not to be named. For a Factbox on German, French and Swiss bank exposure to Greece and Spain, double click on [ID:nLDE61A1VT] For a full list of stories on Greece's plight, double click on [ID:nEUROPEAND] ($1=.7251 Euro) (Additional reporting by Christian Kraemer in Munich; editing by Karen Foster)