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If Greece goes… by Financial Times

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Beware hidden costs as banks eye ‘Grexit’

By Gillian Tett

May 24 2012

Earlier this month, I asked the leaders of a group of US-based companies what – if anything – they were doing to prepare for “Grexit”, or a possible exit of Greece from the eurozone. The responses from the manufacturers were rather vague.

The bankers, however, were alarmingly precise: amid all the speculation about Grexit, they told me, banks are increasingly reordering their European exposure along national lines, in terms of asset-liability matching (ALM), just in case the region splits apart. Thus, if a bank has loans to Spanish borrowers, say, it is trying to cover these with funding from Spain, rather than from Germany. Similarly, when it comes to hedging derivatives and ...

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