Hmm, this number looks suspiciously low:
British banks have more than £42?billion of outstanding loans to Italy, including almost £10?billion to the government.
Although maybe not actually.
Most Italian government debt is actually owed to Italian households.
Say Italy does default, there\’s a 50% haircut (rather higher than I think there would be if it did BTW) so the UK banks would lose £21 billion.
An amount that hurts, certainly, but not one that would bankrupt the system. Especially if it takes a year or so to actually happen and thus provisions can be phased in.
The French banks on the other hand…….