“Greece’s inability to form a government stems from the unwillingness of the far-left Syriza party to compromise on its anti-austerity platform and join pro-austerity parties,” said Georgios Tsapouris, investment strategist at Coutts. “Unfortunately, polls indicate Syriza is leading ahead of June elections. Unless Syriza accommodates the adjustment in the tone of austerity proposals by the IMF’s Legarde, and this is accepted by the other members of the Troika, the risk of Greek exit remains elevated.”
Main threat: contagion
Most of the CIOs, economists and investment professionals polled by this publication cited contagion as the main threat to wealth management. “This could have a serious effect on banks in the euro area and other banks around the world”, a chief investment officer of a UK wealth manager told WealthBriefing.
“In due course, as existent and subsequent pressures build, we would expect others to follow suit,” Marson of Lombard Odier said. Marson referred to the banking system as already “very fragile”, and that contagion would force the European Central Bank to embark on major recapitalization.
“A default by Greece could potentially be compared to the bankruptcy of Lehman’s which triggered a chain of events that led to the financial recession,” said Ted Scott of F&C.