Greek default is the high-profile threat to eurozone banks that hogs the headlines, and drives down the share prices of the region’s banks. But, aside from the Greek banking system itself, Greece is not a big threat to European banking solvency.

Substantial ownership of Greek debt by French and German banks is a manageable portion of their books, and they are supported by countries with strong finances. By contrast, Italy’s very large banking system is heavily exposed to its government debt. Equally worrying are Ireland, Portugal and Spain where the debt excesses are in their private sectors – in each case largely bank financed. These excessive debts, the banks’ chief assets, could soon prove to be worth far less than 100 cents in the euro.

To get a fuller measure of the burden that may fall upon the state’s resources, we need to add a country’s household and net business debt to net government debt as these will have to be serviced in some fashion from that country’s income. By this broader definition, Italy comes off relatively well, with total debt slightly more than 200 per cent of gross domestic product. Greece at nearly 230 per cent is less bad than Spain, as well as Britain and Japan. Way out on their own, however, are?Portugal?at more than 300 per cent, and Ireland at 330 per cent. Diana Choyleva and I in our latest book* explain why this means the credit of Portugal and Ireland, and probably Spain, could well become more threatened than Italy – though not as badly as Greece, which has particularly acute?government?debt?and?deficit problems.