News for Credit Professionals       NACM-SE

Greek Elections Causing Biggest Showdown with EU-Backers Yet

Through this week’s elections, the Greek populous and opposition politicians sent their anti-austerity message and thumbed their noses at those holding the purse strings behind the European Union and International Monetary Fund’s bailout of the debt-saddled nation. Other members of the EU, mostly northern, aren’t taking it lightly—and the response could lead to even greater uncertainty.

Railing against the austerity demands allowed by incumbents, neither of the two major parties—New Democracy and Pasok in Greece—were able to come close to winning a minority. This situation will cause heightened uncertainty (disruptions) in the nation and beyond over the coming weeks. The politicians who made the gains railed against any ideas for alliances and have publicly voiced rhetoric about desiring more favorable bailout conditions.

Those footing the bill, notably the Germans, aren’t amused and have answered with thinly veiled threats about delaying the planned bailout payment to Greece scheduled for today (Thursday). Worst-case scenario has Greece falling out of the Euro by some time this summer, NACM Economist, Christ Kuehl noted.

But what is the big impact on the credit industry? Perhaps the answer, for the short-term, is to do nothing except keep an eye on things very closely in the coming days and weeks ahead. Remember the basics: know your customer.

Ben Deboeck, country and sector risk coordinator for Ducroire Delcredere (keynote speaker at FCIB’s International Credit & Risk Management Summit in Hamburg from May 13-15), noted that Greek unrest rarely comes as a surprise anymore. Deboeck pointed out that bond markets barely moved.

“Nothing too surprising happened yet,” the Belgian-based Deboeck told eNews. “So, immediate consequences of the Greek elections, as well as French elections, are rather limited I'd say. More important than Greece/France is probably what is happening in Spain, with the government finally moving towards action to tackle the banking problem”.

Going forward, however, Deboeck admits the impact of sustained volatility or an increase in volatility could affect consumer and business confidence and therefore eventually, credit.

- Brian Shappell, CBA, NACM staff writer