Banks sink on Greek vote bombshell
LONDON/FRANKFURT | Tue Nov 1, 2011 12:08pm EDT
(Reuters) -
French banks and lenders exposed to Greece and other weak euro zone countries slumped on Tuesday after Greece's leader said he would put a bailout plan to a referendum, raising the risk of a disorderly default.
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If Greek voters reject the unpopular bailout plan it could result in a "hard default," which could force banks to take losses of about 75 percent on their Greek sovereign bonds, trigger payouts on credit default swap insurance contracts, and raise the threat of a systemic risk, said Andrew Lim, banking analyst at Espirito Santo in London.
"If we get a hard default in Greece, it will exacerbate the situation with Italy and Spain. It just increases the problem of Italy going down the same route, and that's the real risk," Lim said.
Greece's referendum is expected to take place in a few weeks, adding uncertainty about the bailout to a febrile mood in the European financial sector. Last week's deal had raised hopes a line could be drawn under banks' Greek losses and euro zone bonds could be sold to China and other investors.
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http://www.reuters.com/article/2011/11/01/us-markets-europe-stocks-banks-idUSTRE7A01D220111101I hope they vote to reject the austerity bailout and tell the banks to shove it.