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The conservative New Democracy party beat the field in Sunday's election, pushing into second place the anti-bailout leftist SYRIZA party, and calming the nerves of those who believed a SYRIZA victory would have led to Greece's exit from the euro zone and financial chaos across the continent.
But with the euro zone debt problems unresolved and Greece's political and financial stability far from assured, industry insiders and analysts say French banks will probably keep shifting assets out of the country, cutting funding ties to local units and writing down the value of Greek holdings to draw a line under years of losses.
French lenders including Credit Agricole and Societe Generale held an estimated cross-border Greek exposure of $44 billion at end-December, according to Bank for International Settlements data, putting them most at risk of a sudden, messy Greek exit from the currency union.
Greece is still in the fifth year of recession and carrying debt equivalent to about 160 percent of GDP, and if it can cobble together a ruling coalition, faces years of austerity before a return to growth, but at least the doomsday scenario has been averted for now.
"This gives banks a bit of headroom, a bit of space to try to find a lasting solution to the Greek issue," said a French banking source, adding that there was nothing in the election result that would change the strategy of cutting back on Greek exposure. "There is a structural problem in the Greek market that has to be resolved. The alternative would be to accept regular losses in the hundreds of millions of euros."
PARIS, June 18 |
(Reuters) - French banks, the top foreign
lenders to Greece, are expected to continue their quiet retreat
from the debt-wracked country after Greek voters gave a slim
majority to parties supporting the international bailout that
keeps it afloat.The conservative New Democracy party beat the field in Sunday's election, pushing into second place the anti-bailout leftist SYRIZA party, and calming the nerves of those who believed a SYRIZA victory would have led to Greece's exit from the euro zone and financial chaos across the continent.
But with the euro zone debt problems unresolved and Greece's political and financial stability far from assured, industry insiders and analysts say French banks will probably keep shifting assets out of the country, cutting funding ties to local units and writing down the value of Greek holdings to draw a line under years of losses.
French lenders including Credit Agricole and Societe Generale held an estimated cross-border Greek exposure of $44 billion at end-December, according to Bank for International Settlements data, putting them most at risk of a sudden, messy Greek exit from the currency union.
Greece is still in the fifth year of recession and carrying debt equivalent to about 160 percent of GDP, and if it can cobble together a ruling coalition, faces years of austerity before a return to growth, but at least the doomsday scenario has been averted for now.
"This gives banks a bit of headroom, a bit of space to try to find a lasting solution to the Greek issue," said a French banking source, adding that there was nothing in the election result that would change the strategy of cutting back on Greek exposure. "There is a structural problem in the Greek market that has to be resolved. The alternative would be to accept regular losses in the hundreds of millions of euros."
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