Moody's warns of wider Greek woes
Source: Agencies |
May 7, 2010, Friday
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THE debt crisis that is enveloping Greece could spread to hurt the banking systems in Portugal, Italy, Spain, Ireland and Britain, a leading global credit ratings agency warned yesterday.
Moody's Investors Service said that although banks in some countries, such as Portugal and Italy, were not heavily affected by the past years' financial crisis, they could be impacted by the fiscal crisis if it spreads outside of Greece.
"A key factor determining whether contagion risk continues in this case will be the market's view of the likely success or otherwise of the recently agreed International Monetary Fund and European Union support package for Greece," the agency said.
That bailout offers the debt-ridden country 110 billion euros (US$142 billion) in loans over three years from the IMF and the other 15 countries that use the euro.
Moody's said the banking systems of Portugal, Italy, Spain, Ireland and Britain all faced different challenges of different types, but warned that "contagion risk could dilute these differences and impose very real, common threats on all of them."
The banking systems of Portugal and Italy, like that of Greece, were not hit too hard by the financial crisis, but their huge public debt load remains a threat.
Banks in Spain, Ireland and the UK were more exposed to the credit crunch and have weakened their countries' finances significantly over the past year, the agency said.
Moody's Investors Service said that although banks in some countries, such as Portugal and Italy, were not heavily affected by the past years' financial crisis, they could be impacted by the fiscal crisis if it spreads outside of Greece.
"A key factor determining whether contagion risk continues in this case will be the market's view of the likely success or otherwise of the recently agreed International Monetary Fund and European Union support package for Greece," the agency said.
That bailout offers the debt-ridden country 110 billion euros (US$142 billion) in loans over three years from the IMF and the other 15 countries that use the euro.
Moody's said the banking systems of Portugal, Italy, Spain, Ireland and Britain all faced different challenges of different types, but warned that "contagion risk could dilute these differences and impose very real, common threats on all of them."
The banking systems of Portugal and Italy, like that of Greece, were not hit too hard by the financial crisis, but their huge public debt load remains a threat.
Banks in Spain, Ireland and the UK were more exposed to the credit crunch and have weakened their countries' finances significantly over the past year, the agency said.
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