Australian banks lightened their exposure to banks in France and Britain, and increased exposure to China and India over the June 2011 quarter, data released by the Reserve Bank of Australia shows.Local bank exposures were already slight to the "PIIGS" countries of Europe that were the original source of the flap over public finances in the low income countries of Europe - and the stability of banks in Europe's high income countries that hold much government debt from the former group.Australian banks trimmed their modest exposures to Italy to A$1.3 billion (down $200 million over the quarter) and to Spain (which was $1.5 billion and is down $300 million).The exposure of Australian banks to Portugal, Ireland and Greece remains close to nil, or was at the reporting date of June 30.Of more interest is the trimming of exposures to France, to $13.9 billion at June 30, down from $17.1 billion. Exposures to Britain have been cut by about 15 per cent over the last year to $107 billion. Banks are happy with their exposures to Germany, where banks share many of the same dilemmas relating to holdings of European government debt that are faced by banks in France. The exposure of Australian banks to Germany at the end of June was $18.0 billion, twice the level of two years ago.Banks are also increasing their exposure to the key economies of Asia, where exposures have doubled over 18 months in Japan; doubled over two years in China, and also doubled over two years in India.These risks are all measured in Australian dollars and do not allow for exchange rate effects.Excluding New Zealand, the offshore exposure of all Australian banks as of June was $360 billion, or around 11 per cent of industry assets (a percentage little changed over recent years).