Europe’s bankers fear Brexit more than Grexit

The possibility of Britain leaving the European Union sometime in the future worries European bankers a great deal more than the prospect that Greece might be on its way out soon.

Britain’s inclusion in the EU is more important to the bloc’s long-term future than whatever happens to Greece, bankers attending a financial industry conference said, even as last-ditch talks aimed at keeping Greece solvent and avoiding a possible exit from the euro zone rumble on in Brussels. Continue reading

Russia faces ‘perfect storm’ as reserves vanish and derivatives flash default warnings

BNP Paribas says Russia no longer has enough reserves to cover external debt and enters this crisis ‘twice as levered’ as it was before the Lehman crash

Central bank data show that a blitz of currency intervention depleted reserves by $26bn in the two weeks to December 26, the fastest pace of erosion since the crisis in Ukraine erupted early last year.

Credit defaults swaps (CDS) measuring bankruptcy risk for Russia spiked violently on Tuesday, surging by 100 basis points to 630, before falling back slightly.

Markit says this implies a 32pc expectation of a sovereign default over the next five years, the highest since Western sanctions and crumbling oil prices combined to cripple the Russian economy.

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