Thursday 8 December 2016

Bank tips '11th-hour' deal over Greece

Anna Edwards, Renee Bonorchis and Stefania Bianchi

Published 05/06/2015 | 02:30

Antony Jenkins, chief executive officer of Barclays
Antony Jenkins, chief executive officer of Barclays

Barclays Bank chief executive officer Antony Jenkins said he expects a solution to the standoff between Greece and international creditors, which risks ousting the country from the Eurozone.

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"When you look at what's going on in the EU and the Greece situation, there is clearly a process of negotiation happening at the moment," Jenkins said in an interview yesterday from Cape Town. "Past experience shows that there is generally a solution found, albeit at the 11th hour. My money would be on that happening in this situation."

Months of antagonism and missed deadlines have given way to a greater urgency to decide the fate of Greece.

Without access to capital markets, the country has to meet payments totalling more than €1.5bn to the International Monetary Fund in June, while its euro-area-backed bailout also expires this month.

Another round of top-level talks failed to resolve the standoff between Greece and its creditors as Prime Minister Alexis Tsipras yesterday rejected proposals that would unlock bailout funds necessary to avert a default.

Greece's exit from the euro would have limited impact on Barclays because it does little business in the country, Mr Jenkins said at the World Economic Forum on Africa. He added that the bank is still thinking about the "second order consequences" of a possible departure.

In Britain the Bank of England is pushing UK banks to have plans in place in case the Greece crisis escalates.

The UK's central bank said Greek risks remain "significant".

COMPROMISE

With Europe's big powers, and the United States, concerned about the unpredictable outcome as Greek reserves shrink toward zero, the creditors also showed some willingness to compromise by lowering the budget surplus that Athens will be required to run before debt service payments.

Sources familiar with the proposal said they now sought a primary surplus of 1 percent of gross domestic product this year and 2 percent next year. Greece has offered 0.8 percent this year and 1.5 percent in 2016. However, since the Greek economy has fallen back into recession, lowering tax revenues, the lower target will still require painful retrenchment.

Tsipras, elected in January vowing to end austerity, secured a four-month extension of the bailout package in February.

"I believe an agreement is in sight," he said after the talks with Juncker. "But we need to conclude the discussions with a realistic point of view.

"We are very close to an agreement on the primary surplus. That means all sides agree to go further without tough austerity measures of the past," he added.

But he also ruled out scrapping an income supplement for the poorest pensioners or a value-added tax change that he said would raise the tax on electricity by 10 percentage points.

Irish Independent

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