Die Homepage wurde aktualisiert. Jetzt aufrufen.
Hinweis nicht mehr anzeigen.

Survey of German Bankers: At Least One Euro-Zone Country Could Go Bankrupt

Billions in loans have succeeded in pulling Greece and Ireland back from the brink of bankruptcy. But many bankers are still expecting the worst. A new Ernst & Young survey reports that almost half of German banking executives think at least one euro-zone country will go belly up.

An Irish euro coin: Will Portugal be the next country to seek a bailout? Zoom
DPA

An Irish euro coin: Will Portugal be the next country to seek a bailout?

Where will the euro crisis lead us next? Will Portugal really be the next euro-zone country to ask for help from the European Union's rescue fund? It would appear that the majority of investors are expecting it to. What's more, German banking executives even go one step farther: According to a recent survey of executives at 120 banks in Germany conducted by the management consulting firm Ernst & Young, almost half of them predict that at least one euro-zone country will go bust. Indeed, when asked whether they currently expected to see a sovereign debtor in Europe default, 47 percent of those questioned answered "yes."

Still, only a quarter of them said that they expected possible defaults to negatively affect their companies. Claus-Peter Wagner, the head of the financial services division of Ernst & Young's branch in Germany, said that: "The vast majority of surveyed institutions hold either no or very few bonds of the shaky countries and, consequently, do not have to fear any direct losses." Wagner also added that measures recently taken by the European Central Bank (ECB) to stabilize the bonds of weak euro-zone countries had been successful.

Nevertheless, Wagner did warn that there would be catastrophic consequences if one of these countries actually did become insolvent. "If some of the major banking houses are forced to make massive write-offs," Wagner said, "it would lead to renewed turbulence in the entire global securities market."

The ECB has recently being stabilizing the market by buying up the sovereign bonds of dangerously over-indebted euro-zone countries. Until the end of last week, the ECB had done this to the tune of roughly €74 billion ($96 billion). Dispute within Portugal's Central Bank

According to information obtained by SPIEGEL, Germany and France want to push Portugal to seek a bailout from the EU's rescue fund as soon as possible because they don't think the financially troubled country will be able to borrow funds on capital markets for much longer. Officials in Berlin and Paris deny exerting any pressure to make such a move. And Portuguese Prime Minister Jose Socrates insists that his country will be able to stick to its 2010 budgetary targets and does not need any assistance.

German Chancellor Angela Merkel has been cautioning against making any overly hasty judgments regarding the situation in Portugal. She intends to initially take a wait-and-see stance toward Portugal's reform efforts aimed at increasing stability. "From our point of view," Merkel told reporters Tuesday, "Portugal has undertaken what are obviously very significant and far-reaching measures."

The debate over whether Portugal will eventually be forced to ask for help has sparked controversy within the country's central bank. Teodora Cardoso, a member of the bank's six-member board of directors, has publicly entertained the idea of accepting EU funds -- and thereby pitted herself against her boss, Carlos Costa, the board's governor.

Last week saw an additional rise in the risk premiums for the sovereign bonds of weak euro-zone countries. Greece and Ireland have already accepted help from their fellow euro-zone member states and the IMF that came with stiff conditions. However, Tuesday's markets did bring some good news for Greece: At an auction of six-month T-bills, the Greek government was able to raise €1.95 billion instead of an expected €1.5 billion. According to the Finance Ministry in Athens, the interest rate on the papers was 4.9 percent.

According to the Ernst & Young survey, executives are predicting that 2011 will be a good year for their banks. For the next six months, 81 percent of the executives expect to see positive trends in their business operations, and 12 percent even expect them to be very positive. This last figure reveals a marked improvement in bank expectations from last June, when only seven percent of respondents were confident enough to predict very positive results.

jtw -- with wires

Article...
Comments
Discuss this issue with other readers!
3 total posts
Show all comments
    Page 1    
1. *
BTraven 01/12/2011
Strange times – everybody knows that the banks are the ones which are bailed out, however, the majority of their bosses claim they will not be affected in a case of bankruptcy. So why are Greece and Ireland not permitted to write off their debts?
2.
muley63 01/17/2011
Zitat von BTravenStrange times – everybody knows that the banks are the ones which are bailed out, however, the majority of their bosses claim they will not be affected in a case of bankruptcy. So why are Greece and Ireland not permitted to write off their debts?
That would mean German bankers would get hurt. As an American, everybody in this country knows bankers have the perfect racket - heads, bankers win; tails, countries lose (tax payers).
3.
BTraven 01/19/2011
Zitat von muley63That would mean German bankers would get hurt. As an American, everybody in this country knows bankers have the perfect racket - heads, bankers win; tails, countries lose (tax payers).
So, in a certain sense, their greed- and aloofness helps to unify the world.
Show all comments
    Page 1    

© SPIEGEL ONLINE 2011
All Rights Reserved
Reproduction only allowed with the permission of SPIEGELnet GmbH




Graphic: Debt burden Zoom
DER SPIEGEL

Graphic: Debt burden

Graphic: Budget deficits in the euro zone Zoom
DER SPIEGEL

Graphic: Budget deficits in the euro zone


Graphic: The European Financial Stability Facility Zoom
DER SPIEGEL

Graphic: The European Financial Stability Facility


International Newsletter
Sign up for our newsletter -- and get the very best of SPIEGEL in English sent to your email inbox twice weekly.
Twitter
Facebook