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Grexit: Avoiding the slippery slope

30 April 2015

Robert Kuenzel
, 
Chris Scicluna
  • The Greek government’s reshuffle of its bailout negotiating team has raised hopes that a deal will be reached to avoid default and euro exit. And that remains our baseline scenario.
  • But not least due to difficult domestic politics and the amateurish nature of the government, the risk of a disorderly end to Greece’s membership of the euro remains significant.

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UK election: Political risks rising

24 April 2015

Grant Lewis
  • The fragmentation of British politics over recent years makes the outcome of the 7 May election more uncertain than for any since before the war.
  • No single party looks set to win sufficient seats to form a majority government, so some form of multi-party arrangement will be required. And negotiations are likely to take longer than the five days they took in 2010.
  • On balance, a Labour-led administration supported by the SNP and Lib Dems looks to be the most likely outcome. That may result in some near-term financial market volatility, while the post-election political landscape looks likely to be one of heightened political risks whichever of the two main parties leads the new government.

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Pfandbriefbank – not another Heta?

27 March 2015

Jakub Lichwa

A relatively low-profile entity in Austria – Pfandbriefbank Oesterreich AG (Pfandbriefbank) – is becoming the next critical chapter in the Austrian banking system story, as the reaction of the State of Carinthia to its obligations vis. Heta’s senior unsecured bond guarantees has sparked investor uncertainty about the broader guarantee framework in Austria.

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Will Syriza's bark be worse than its bite?

23 January 2015

Robert Kuenzel
  • The radical left-wing party Syriza seems bound to win Greece’s election on Sunday.
  • With Greece having most to lose if it left the euro, we suspect Syriza's bark will be worse than its eventual bite.

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ECB QE: Bazooka or fudge?

21 January 2015

Robert Kuenzel
  • At tomorrow’s Governing Council meeting we expect the ECB to launch a QE programme of at least €500bn consisting primarily of sovereign bond purchases.
  • The programme’s effectiveness is likely to be diminished by concessions to the German-led opposition to QE.
  • Although beneficial, the programme’s economic impact is unlikely to be sufficient to return inflation rapidly to target.

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