Citibank predicts Greece will leave the euro
MILAN, July 26 (Reuters) - The chances of Greece leaving the euro in
the next 12-18 months have risen to about 90 percent, U.S. bank Citi
said in a report on Thursday, saying Athens was most likely to quit
the single currency within the next two to three quarters.
The report, dated July 25 but distributed in an email on Thursday,
said the bank expected Italy and Spain to take a formal bailout from
the European Union and IMF on top of the banking aid for which Madrid
has already asked.
Citi economists had previously put the chances of a Greek exit at 50
to 75 percent.
"We remain gloomy on the euro crisis," Citi economists said.
"Over the next few years, the euro area end-game is likely to be a mix
of EMU exit (Greece), a significant amount of sovereign debt and bank
debt restructuring (Portugal, Ireland and, eventually, perhaps Italy,
Spain and Cyprus) with only limited fiscal burden-sharing."
Citi said it expected Greece's exit from the euro coupled with
economic weakness in the euro zone's periphery to trigger further
sovereign downgrades in the single-currency bloc in the next two to
three quarters.
It saw at least a one-notch downgrade by at least one major agency for
Austria, Belgium, France, Germany, Greece, Ireland, Italy, the
Netherlands, Portugal and Spain.
.
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