Bloomberg News

Greek Stocks Fall Most in 17 Months; National Bank Slides 14%

October 04, 2011

Oct. 4 (Bloomberg) -- Greek stocks fell the most in 17 months after policy makers signaled they may renegotiate the terms of the nation’s bailout, increasing concern that the European debt crisis is worsening.

Banking shares led declines, with National Bank of Greece SA and EFG Eurobank Ergasias SA losing more than 9 percent. Aegean Airlines SA dropped 2.4 percent as the company announced it canceled flights because of a strike.

The benchmark ASE Index dropped 48.96, or 6.3 percent, to 730.33 at the 5:20 p.m. close in Athens, its largest decline since May 2010. Euro-area finance ministers meeting yesterday considered “technical revisions” to the second Greek bailout, Luxembourg Prime Minister Jean-Claude Juncker said, fueling concern bondholders may have to take bigger losses on the nation’s debt.

“The anxiety is palpable,” said Anita Paluch, senior sales trader at Gekko Global Markets Ltd. in London. Policy makers recognize “what has been noticed by the markets for a while, namely the need for even greater reduction of Greek debt and larger commitment of the private sector in the process.”

Finance ministers considered reshaping a July rescue deal for Greece that anticipated investors would contribute 50 billion euros ($66 billion) to a 159 billion-euro bailout. That private sector involvement, or PSI, includes debt exchanges and rollovers.

“As far as PSI is concerned, we have to take into account that we have experienced changes since the decision we have taken on July 21,” Juncker told reporters early today. “These are technical revisions we are discussing.”

Greek Banks Slump

National Bank of Greece, the country’s biggest lender, plummeted 14 percent to 2.19 euros, its lowest closing price since 1996. Eurobank and Piraeus Bank SA tumbled 9.4 percent to 77 euro cents and 18 percent to 36 cents, respectively.

Aegean Airlines fell 2.4 percent to 1.60 euros. The company canceled flights for Oct. 5 and rescheduled seven routes for today as air-traffic controllers took part in a 24-hour strike called by Greece’s biggest public-sector union, ADEDY.

Tony Tyler, chief executive officer of the International Air Transport Association, said profits in the industry forecast to total $28 billion in the three years through 2012 may be unsustainable as over-capacity and looming regulatory costs weigh on margins.

Airlines will generate net income equal to 0.8 percent of revenue next year, a margin that may shrink further if economic growth slows to less than 2.4 percent, Tyler said in an interview in London.

--Editors: Will Hadfield, Andrew Rummer

To contact the reporter on this story: Julie Cruz in Frankfurt at jcruz6@bloomberg.net

To contact the editor responsible for this story: Andrew Rummer at arummer@bloomberg.net


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