World Economy

Greek Default Controllable

Greek Default ControllableGreek Default Controllable

UBS’s chairman said a default by Greece is seen by the International Monetary Fund as “systemically controllable” and he believed it would have a negligible impact on the Swiss bank itself, according to a newspaper interview published on Saturday.

Athens is lurching closer to bankruptcy, with its next big test on May 12, when it is due to pay 750 million euros ($815m) to the IMF. Eurozone finance ministers told Greece on Friday that its leftist government would get no more aid until it agreed a complete economic reform plan, Reuters reported.

In an interview with Neue Zuercher Zeitung, the chairman of Zurich-based UBS, Axel Weber, addressed the alternative if eurozone and Greek officials fail to reach an agreement.

“I’ve just come from a meeting of the International Monetary Fund. There, the consensus is increasingly that a Greek default would be systemically controllable,” Weber said in the interview, without elaborating.

Weber is the former head of Germany’s central bank, during which time he also served as the German governor of the IMF. He has been chairman of UBS since 2012.

Weber said the Swiss bank had reduced its exposure to Greek debt long ago, and that thus a default would have negligible consequences.

The impact of a potential Greek default is the biggest risk to the eurozone’s economic recovery after a long crisis from which the 19-nation currency area is finally emerging.

Unlike at the height of the crisis in 2011-12, economists believe the eurozone is far better placed to withstand any Greek default because the currency bloc has its own bailout fund, support from the European Central Bank and a banking union that can protect banks from crisis fallout.

 European Creditors

Greece’s European creditors sought to douse talk that they are making plans for a potential Greek exit from the euro and expressed hope that recent criticism may prompt the country to push ahead with an economic reform plan needed to unlock rescue loans.

In the Latvian capital of Riga, the eurozone’s top official, Jeroen Dijsselbloem, said he hoped “some extra urgency” will be injected into the process following the “critical” meeting of the eurozone’s 19 finance ministers the day before.

Greece’s Yanis Varoufakis was rebuked for failing to come up with a list of economic reforms, which are needed so Greece can get money it needs to stay solvent and avoid a potential exit from the euro.

“But it is going to take a couple of days at least,” Dijsselbloem said.

Just two months ago, Greece secured an agreement from the eurozone to get the remaining money in its bailout fund – 7.2 billion euros ($7.7 billion) – but only if it came up with mutually agreed reforms.

But with days to go, Athens has yet to present a full list, prompting Friday’s criticism of Varoufakis and the effective abandonment of the deadline.

“Yesterday, we spoke of an A plan, of ‘the’ plan, because there is no plan B, C, D, or E,” said French Finance Minister Michel Sapin. “There is only one plan, and that’s Greece in the euro, Greece in Europe.”

Wolfgang Schaeuble, Germany’s finance minister, said it doesn’t make any sense to engage in talk of a plan B but noted that history has a way of working out in a surprising manner.

All sides agree the clock is ticking. The next possible date for a deal could be May 11, when euro ministers meet next and just one day before Greece owes a big payment to the International Monetary Fund.

Greece has relied on 240 billion euros in bailout loans since May 2010 from its euro partners and IMF after it was locked out of international bond markets amid concerns it was insolvent.