Secret meeting of international bankers to assemble to discuss Eurozone’s fate: Greece thrown under the bus

May 26, 2012 – LONDON – London will this week host a private global summit on the world financial crisis amid mounting pressure on eurozone economies. No agenda has been published and there will be no communiqué issued afterwards. ‘It is a private, off-the-record meeting,’ said a source. In the past two days, Spain’s fourth biggest lender, Bankia, said it needed a 19 billion euros (£15 billion) bailout and the prosperous region of Catalonia warned that it needed more funding from Madrid. The yield on Spanish government bonds – the government’s likely cost of borrowing – jumped to 6.3 per cent, a figure widely regarded as unsustainable. The summit will be dominated by central bankers including the host, Sir Mervyn King, Governor of the Bank of England. Mario Draghi, president of the European Central Bank, and Zhou Xiaochuan, governor of the People’s Bank of China, have been invited. The eurozone is paralyzed as it awaits the outcome of elections in Greece on June 17. The left-wing Syriza party is leading in the polls and is pledged to reject austerity. Hawks led by Germany insist that Greece must stand by the cuts program if it is to keep receiving bailout money. Greece might have to exit from the euro. Christine Lagarde, managing director of the International Monetary Fund, also struck an uncompromising stance this weekend, saying she had little sympathy for Greeks who did not pay their taxes and said the country needed to stick to its austerity package. Meanwhile, banknote printer De La Rue releases full-year results on Tuesday. Its shares have jumped as Greece may soon need drachmas. –TIM 

Lloyd’s of London prepares for Eurozone collapse: The chief executive of the multi-billion pound Lloyd’s of London has publicly admitted that the world’s leading insurance market is prepared for a collapse in the single currency and has reduced its exposure “as much as possible” to the crisis-ridden continent. Richard Ward said the London market had put in place a contingency plan to switch euro underwriting to multi-currency settlement if Greece abandoned the euro. In an interview with The Sunday Telegraph he also revealed that Lloyd’s could have to take write-downs on its £58.9bn investment portfolio if the eurozone collapses. Europe accounts for 18pc of Lloyd’s £23.5bn of gross written premiums, mostly in France, Germany, Spain and Italy. The market also has a fledgling operation in Poland. Lloyd’s move comes as a major Franco-German provider of credit insurance for eurozone trade, Euler Hermes, said it was considering reducing cover for trade with Greece because of the risk the country might leave the eurozone. When a company goes bust, it is often sparked by withdrawal of credit insurance for suppliers wanting to trade with it. A spokesman for Euler Hermes, Bettina Sattler, told Bloomberg: “The outcome of the new elections in June remains highly uncertain. Consequently, the situation is further deteriorating. The risk of Greece exiting the eurozone has been revived. “In light of the recent developments, Euler Hermes will most probably have to switch to a more prudent approach…now we are confronted with a changing situation.” Lloyd’s fears are likely to be shared by a number of European businesses, which are watching developments in Greece. On Saturday, Juergen Fitschen, co-chief executive of Deutsche Bank, described Greece as a “failed state” run by corrupt politicians. “I’m quite worried about Europe,” Mr Ward said in one of the first admissions by a major UK business leader of the scale of the crisis that would be prompted by a eurozone collapse. –Telegraph

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