Banks and other financial institutions in Europe are stress-testing their internal systems and dusting off two-year-old contingency plans for the possibility Greece could leave the region’s monetary union after a key election later this month.
Among the firms running through drills are Citigroup Inc. C, -2.23% Goldman Sachs Group Inc. GS, -1.53% and brokerage ICAP PLC IAP, -0.87% according to people familiar with the matter.
The firms’ plans include detailed checks on counterparties that could be significantly affected by a Greek exit, looking at credit exposures and testing how they would provide cross-border funding to local operations, MarketWatch reported Monday.
Some firms are also preparing for the impact on payment systems and conducting trial runs of currency-trading platforms to see how they would cope with adding a new Greek currency or dealing with potential capital controls.
The moves come as Greek leftist opposition party Syriza continues to lead in recent public opinion polls ahead of national elections on Jan. 25. The ruling coalition government has framed the election as a de facto poll on whether the country stays in the eurozone, saying Syriza’s anti-austerity policies would force a break with eurozone partners. Syriza, though, hasn’t campaigned on an exit and most Greek voters want to stay in the monetary union, according to recent polls.
Most analysts still say the chances of a Greek exit are quite low. Economists at Commerzbank rate the chances on an exit at below 25%.
