Greek Bank Tragedy

Greek stocks headed to their worst session since 1990 as most badly performed the bank sector. The benchmark index Athens Stock Exchange (ASE) declined by 7.18% at 14:40 GMT, shares of Eurobank Ergasias, Piraeus Bank and National Bank of Greece fell by more than 21%.

Greek stocks once again became the worst performers among a total of 93 global equity indexes.

So far this year Athens ASE stock index erased more than 25%, which is nearly two times bigger decline than in the pan-European Stoxx Europe 600.

 “There’sa complete buyers’ strike across the board today, ” said George Athanasakis,equity sales director at Pantelakis Securities SA in Athens. “It’s all about international malaise hitting a very illiquid market, made worse by that spike in bond yields. There’s the risk that if the government’s aid negotiations dragon for much longer, then the banks and the economy will hurt.”

The benchmark ASE Index fell 6.7 percent at 2:50 p.m. in Athens, with Eurobank Ergasias SA, Piraeus Bank SA and National Bank of Greece SA all down more than 22 percent. With a 26 percent tumble in 2016, the ASE is the worst performer among 93 global equity indexes tracked by Bloomberg. It’s slumped almost twice as much as the Stoxx Europe 600 Index.

The yield on 10-year Greek debt jumped 45 basis points, or 0.45 percentage point, to 10.01 percent. The yield has climbed from 8.29 percent at the end of 2015.

Greece’s government remains at loggerheads with its creditors over demands for additional belt-tightening measures, including pension cuts, while farmers, independent professionals and workers protest its social security overhaul proposals. Representatives of the International Monetary Fund, the European Central Bank, the European Commission and the European Stability Mechanism left Athens after a week of talks on Friday with no breakthrough in sight and date set for their return to complete yet another stalled bailout review.

Even as the government can build arrears to its suppliers and vendors to stay afloat through May in the absence of bailout-fund disbursements, uncertainty is weighing on the country’s recovery prospects. The European Commission said last week that Greece’s economy will shrink by 0.7 this year, after stagnating in 2015. Economic weakness adds to Greek banks’ woes, as lenders struggle to cope with more than 100 billion euros ($111 billion) of non-performing loans and the impact of capital controls imposed last summer.

“TheGreek crisis is not over, it’s not solved, and there are still a lot of problems, so if you want to get rid of risk, then you have to sell Greece as well,” said Christoph Kind, head of asset allocation at Frankfurt Trust, which manages about $20 billion and doesn’t hold any Greek assets. “It’s definitely,risk off, and the periphery is suffering a lot today.”