International banks plan for Greece bankruptcy after NO vote

What happens next with Greece? The country's future is more uncertain than ever after No

The Greeks have rejected the previous rescue policies. This makes a state bankruptcy likely the fate of banks is uncertain. But a euro exit is not mandatory.

BY SEBASTIAN JOST and HOLGER ZSCHÄPILZ

The Greeks have pushed Europe ahead of the head. With the clear majority they have – this is the state after counting of almost 95 percent of the vote – in favor to turn down the offer of European lenders.

With the No they are also followed their government that had campaigned heavily for a OXI.

For Europe now difficult times are coming. For the Greek population, the recent rescue policy rejected that. They defied warnings from Brussels, a No could mean the withdrawal of the country from the euro.

How serious is the situation, shows the frantic activity in Europe

So Chancellor Angela Merkel wants to meet French President Francois Hollande on Monday to discuss the future of Greece. Both want a Tuesday summit of the heads of state and governments of the euro zone.

Translation / Die Welt

Given the growing social distress in Greece expects EU Parliament President Martin Schulz that the European Union should launch a “humanitarian assistance program” for the euro crisis country as early as Monday or Tuesday.

In the financial markets now threaten significant turbulence, the euro fell against the dollar in the Far East, first by around 1.4 percent. The German share index DAX is seen to trade opening on Monday four percent lower.

No vote for the Grexit

The future of Greece is now more uncertain than ever. Although the euro-zone countries wanted to reinterpret the referendum into a vote on the Grexit: The majority of the No camp does not mean that the Greeks want to exit from the euro, which was rejected by a large majority.

Formally the Greek voters have now rejected an offer that is no longer on the table. After all has been put to a vote a proposal from the euro countries and the International Monetary Fund (IMF) on the extension of the second Greek aid program, but that is expired in the meantime.

Triumph for Tsipras

Nevertheless, the result is now a bang. Thus the Greeks have made against the previous rescue policies for the country: They reject strict austerity and reform conditions as the price of further aid from loans.

The outcome of the referendum is a triumph for government of Alexis Tsipras and Finance Minister Yanis Varoufakis. There will find further support in their hard line against the creditors of the country.

Negotiations with the lenders more difficult than ever

That does not mean the end of the talks with the creditors that will continue after the admission of all those involved. But these talks are likely to be more difficult than ever.

Tsipras can now rely on the fact that his people reject just as he rescue the previous policy – and is has all the more insistent urge to the demand d of him for a long time a haircut.

This, however, have so far categorically ruled out the euro area countries. So the situation is still the same as before the referendum. A short-term meeting of the Eurogroup of finance ministers, who are responsible for all the detailed questions of rescue programs, was not even convened.

First of all, most probably on Tuesday, leaders will explore the difficult situation themselves. What happens in the days that follows is open. If you cannot agree, backs a sovereign default and a Gexit now the closer.

Greece is now nearly bankrupt

After NO a national bankruptcy is now more likely than ever. Even if both sides continue to negotiate, which is likely to take longer. Meanwhile, Athens, however, can no longer meet its payment obligations.

By the end of June was not enough money in the treasury, to repay loans to the International Monetary Fund (IMF). Thus the land was formally not yet bankrupt. The rating agencies evaluate only a failure to private creditors than bankruptcy, and this does not count the IMF.

Critically, it will be next Friday. Then the finance minister has to refinance short-dated Treasury bills in the amount of two billion euros. On July 14, in turn a loan from the 90s will be charged. If Athens does not raise the money, the rating agencies would determine the national bankruptcy.

It would be the second in just over three years. 2012 Greece had a debt cut enforced on its bonds – thanks to the approval of the creditors was voluntary but formal.

Bankruptcy is not equal to euro exit

A bankruptcy does not necessarily mean withdrawing from the euro zone.Greece could theoretically remain as bankrupt country member of the monetary union. In any case, a Grexit is not legally so easily possible. The founders of the euro have deliberately avoided an exit clause. Only a departure from the European Union would void the precondition for euro membership.

Although many experts believe that would find a way, like Greece could excrete despite EU membership of the euro – if it want for the Greeks. So far, Tsipras refuses, but, just like the majority of people in his country. The question is whether Greece can cope with a national bankruptcy, without introducing its own currency.

Financial experts believe that the Grexit now very likely. For the investment banks JP Morgan and Barclays the exit of the country from the euro zone is the baseline scenario, the research firm Oxford Economics estimates the Grexit probability with 85 percent.

With an independent monetary policy, it would for example be easier to stabilize the country’s banks. And also Jörg Krämer, chief economist at Commerzbank, there can be no lack of clarity. “If the Greeks vote against a compromise with the international community, it is the most likely scenario that Greece at the end of exit from the monetary union.”

Banks likely to remain closed

For financial institutions the increased uncertainty is exacerbated by the situation. On Monday they are in any case still closed. And will they open directly after again, this is unlikely after the vote.

At least the capital controls will have to remain in force, limit cash withdrawals to 60 Euro per day and prohibit international transfers. Because there is now increasing the risk of Grexit, many Greek bank customers would probably vacate their accounts as soon as the switch reopen and the controls are loosened.

This rush would be no match for the Greek banks. You would threaten bankruptcy because they could not be compensated for by new aid loans the Fed outflows. This, the ECB had frozen a week before the referendum.

ECB in a dilemma

The Governing Council is planning a conference call for Monday, and is faced with the perhaps trickiest decision of euro crisis, The risk of a Greek sovereign default and a euro exit is greater than ever for this referendum result. This also increases the risk that the ECB will have to write at the end of their Greece-commitment of more than 100 billion euros in the wind.

Additional emergency loans for the Greek banks are justified in this situation barely, according to the pure doctrine, the central bank would probably even been awarded nearly 90 billion euros reclaim immediately. Thus it would however send the Greek banks in the safe failure.

Many observers assume that the ECB will not directly create such facts on Monday, but at least still gives politics a little time to find an answer for the standoff.

But over the next few days, the outlook is bleak. “I expect in the coming weeks a complete collapse of the Greek banking system, because the ECB is its emergency aid can not be maintained,” said Marcel Fratzscher, President of the German Institute for Economic Research (DIW) and a former ECB economist.

Expects turmoil in financial markets

The actors in the financial markets are hit hard by the No of the Greeks. Until recently they had set to yes, but unable to imagine any rational financial professionals that the Greeks take the risk of a Grexit with a NO.

The markets have to live with a new uncertainty. Because the risk of a leak of the Greeks out of the euro zone has increased significantly with the No. The economists at UBS estimate the probability to 70 percent.Well it depends on how the financial markets deal with the new situation.

To a new Lehman disaster, as some professionals have oracle, it probably will not come. However, standing before turbulent hours. The experts of investment bank Jefferies expect a slump in Dax by up to ten percent.

Temporarily likely break even the euro. From the desire in the safety of bonds will benefit. Their interest should open considerably lower beginning of the week

Risks for German taxpayer

Although lower interest rates tend to be good for the federal budget, the risks are much greater. After five years of financial aid Athens is among German taxpayers about 90 billion euros in debt. The bulk of the money, namely 38.1 billion are loans to the country, which have been placed on the rescue fund EFSF available.

There are also potential losses at the European Central Bank, which is engaged in Greece with more than 100 billion euros. Loses the ECB money, the burden on the national central banks are redistributed. The Bundesbank would have around a quarter shoulders.

Taxpayers would have it, although probably nachschießen no money – but forego possibly for many years to Bundesbank profits that are to be taken into account 2.5 billion a year in the federal budget.