Greek Banks at Mercy of the Fates

by Paul J. Davies

Wall Street Journal
January 29, 2015

Greek banks are about the most emotional trade in the stock market right now. The problem for investors is that there are few real reasons to buy or sell—everything depends upon what political game the new government wants to play.

Another strong rebound in bank stocks Thursday after days of hefty falls shows there is still a price at which investors will jump back in. Conciliatory words from the new deputy prime minister on Wednesday evening about excessive zeal in comments from inexperienced ministers also helped.

But the sector faces three big imponderables. First is the revived possibility of Greek default and exit from the euro. But more particular to the banking sector are: second, the chances that locals panic and pull their deposits; and third, the desire of the government to interfere with the banks and use them for overtly political purposes.

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