Either the game of chicken in Europe has just hit and surpassed ludicrous speed, or French banks SocGen and Credit Agricole, both of which have some of the worst CT1/TA ratios [6]in the known universe, and which are the JV participants of Newedge, have decided to formally pull the plug on Greece. As the FT reported [7]moments ago, Newedge "has told clients that it will process only sell orders, and stop extending margin loans for existing positions in Greek securities, according to a memo obtained by the Financial Times."
A list of securities subject to the new restrictions include foreign-listed shares and American depositary receipts for Greek companies including Alpha Bank, Coca-Cola Hellenic Bottling and Paragon Shipping, a New York-listed shipowner that is headquartered in Greece.
“It is part of our ordinary risk practices to minimise our potential exposures proactively when we are concerned about potential issues,” the broker said.
Newedge – a joint venture of French banks Société Générale and Crédit Agricole – has Europe’s seventh largest hedge fund prime brokerage business, with more than $31bn in client assets, according to industry publication EuroHedge.
Its move is the latest evidence that the financial sector is preparing for a eurozone break-up, even as European officials debate the terms of the Greek bailout. A person familiar with the matter said Newedge wanted to avoid unpredictable risks in the event that Athens returned to the drachma as the national currency.
Add this to news over the weekend that Euler Hermes is "reviewing Greek export coverage. [8]" To wit - "In light of the recent developments, Euler Hermes will most probably have to switch to a more prudent approach, also in the interest of its customers,” spokeswoman Bettina Sattler said in an e-mailed response to questions. “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." Translation: Greek foreign trade is about to be halted dead in its tracks.
And now, as per the Newedge hint, we have a concerted effort to crash the stock market too.
In other words, in addition to a bank run (because as has been widely reported already, Greek banks have seen billions in cash withdrawn in the past 3 weeks), in addition to trade paralysis, we are about to see a full blown stock market collapse of what little is left in the Athens Stock Exchange as everyone rushes to sell any securities at firesale prices. Sadly, this is nothing but the final punishment for a Greek population which held its first quasi-referendum on being a Eurobanker tolling operation (where European "bailout" funds go simply to fund European bank capital shortfalls, and the ECB of course) and said no.
Simply said - what we are witnessing is the concerted effort of Greece's former "allies" do everything in their power to destroy the small nation just so it has a taste of what would happen if it indeed follows the democratic process. And those organizations, such as the IMF, whose job it is to mitigate such a process, are doing the opposite, and merely pouring fuel on the fire, as LaGarde's interview in the Guardian indicated [9].
Basically, the entire developed world has now gone all in that Greece can be scared out of doing what its population has indicated ever since the first parliamentary election, has every intention of doing.
The only question is whether, as we asked even before the election, the "Greek population has already lost everything and is now free to do anything." Because if it has, and following 2 years of wealth transfer from the Greeks to the banks the answer is almost certainly a resounding yes, the outcome for all those attempting to herd the Greeks, will be far more disastrous than any of their fearmongering attempts of a Greek social collapse ever could be.