Euro zone worries hit closer to home
(25 May 2011 – Australia) The big four Australian banks suffered their biggest one-day fall in almost 12 months on Monday, sliding two percent, slicing over A$9 billion from the financials index.
Growing concern that stresses in the euro zone could trigger another full blown global financial crisis were among reasons for the drop.
The probability is still high that Greece will be forced into a restructure of its €327 billion ($A434 billion) sovereign debt.
Greek Prime Minister George Papandreou yesterday ruled out a restructure. A meeting of key ministers is scheduled this week to formulate a more draconian economic package, including tax increases and the privatisation of state assets to help raise funds.
Any failure to meet the country's punishing schedule of debt repayments could force European banks to revalue their vast holdings of Greek bonds. This could trigger fresh problems for wholesale funding markets.
Last week, Greece was downgraded three notches to B+ from BB+ by ratings agency Fitch, the agency also put Greece on negative watch, further fuelling worries.
The probability is still high that Greece will be forced into a restructure of its €327 billion ($A434 billion) sovereign debt.
Greek Prime Minister George Papandreou yesterday ruled out a restructure. A meeting of key ministers is scheduled this week to formulate a more draconian economic package, including tax increases and the privatisation of state assets to help raise funds.
Any failure to meet the country's punishing schedule of debt repayments could force European banks to revalue their vast holdings of Greek bonds. This could trigger fresh problems for wholesale funding markets.
Last week, Greece was downgraded three notches to B+ from BB+ by ratings agency Fitch, the agency also put Greece on negative watch, further fuelling worries.
Subscribe