Now — far be it from FT Alphaville to tell the Athens public prosecutor what to do, however…
Greece’s finance ministry has blamed a bank trader’s email for spreading rumours that the country will default this weekend. (We’re going to point out, again, that this timing is utterly silly.)
The bank was Citigroup.
By Thursday afternoon, the Greek newspaper Imerisia was carrying a purported copy of the Citi email (and, inter alia, reporting that Greece has asked Interpol to store the email).
(Who do they think they’re dealing with? SPECTRE?)
We’re not going to mention the banker involved, because quite frankly, this is absurd, but we will note this bit of the purported email (emphasis ours):
MKT NOISE Over the last 20min, there seems to be some increased noise over Gr debt restructuring as early as this Easter weekend. Spreads are moving wider now with 2y spread +100 from +35 at midday, while Gr banks are at -4%, -6% vs +2% in the morning.
The last few days the talks over Gr restructuring/rescheduling have intensified, despite the ongoing denials by Gr and foreign officials.
If a credit event takes place it is crucial to see what the terms would be as a haircut would have a much different outcome vs an extension of maturities.
Oops! That’s not a bit, that’s all of it. Firstly, does this look like criminal manipulation of markets to you? We shall leave it to our readers to consider. We wish to focus on the timings of those Greek bank comments.
Right. The email has a time-stamp of 16:42:37.
We understand that this is Athens time.
It is two hours ahead of London time. 14:42:37, to be precise.
From approximately 1400 (London time) on Wednesday 20 April, it can be seen on any Bloomberg terminal that Greek bank stocks began to sell off.
The evidence…
1400 onwards — NATIONAL BANK OF GREECE
1415 onwards — EFG EUROBANK ERGASIAS
1422 onwards — ALPHA BANK
1424 onwards — PIRAEUS BANK
(NB – It used to be about CDS. Now it’s about propping up bank stocks. Pathetic)
Therefore we cannot conclude the rumour started with Citigroup or that Citigroup’s email started the Greek bank sell-off. Despite official claims to the contrary. Someone else’s rumour, it would appear, if rumour it was.
Despite plenty of past form in beleaguered sovereigns lashing out at bystanders… you might think it’s crazy for us to defend just one bank like this when there’s so much else going in Greece.
And we agree: the real injustices have always been inflicted on ordinary Greeks, being asked to suffer for the mistakes of their governments in not controlling the national debt, and being asked (obscenely!) to suffer to protect other countries’ banks.
However, there is a wider, worrying sign here.
The time is coming, and it is coming soon, when Greece will be negotiating with creditors on the terms of a restructuring. The creditors will be expecting that Greece will play by the rules if there’s to be any hope of recovering anything from its defaulted bonds, and if they hope to come back to Greece as a source of investment.
If this is how some Greek officials use the law before the default, just how do you think they’re going to use it after a default?
Do bondholders really want to stay around to find out?
Related link:
Now, about those HBOS rumours… – FT Alphaville (2008)