European banks hit by Greek debt woes

Financial Times
May 9, 2011

Fears that Greece’s sovereign debt woes would require a bigger bail-out hit banking stocks, pushing European equities lower for the fourth time in five days.

The FTSE Eurofirst 300 slipped 0.4 per cent to 1,140.23 in spite of a recovery in risk sentiment that lifted equity markets elsewhere.

But uncertainty over whether Europe’s policymakers would push ahead with more aid was compounded on Monday by Standard & Poor’s as it downgraded Greece’s debt rating from BB- to B.

The benchmark Athens General dipped 1.5 per cent to 1,349.91 after falling as much as 2.3 per cent in the wake of the rating agency’s decision, with National Bank of Greece among the biggest Eurofirst fallers, down 4.1 per cent to €4.72.

“Greece is stuck between a rock and a hard place because Greek banks will take the biggest hit from any restructuring,” said Simon Smith of FxPro.

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