Greek stocks fall by 22% as Athens market tumbles for the third consecutive day

Bank stocks have fallen by a total of 40% since the general election

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The Independent Online

Greek stocks fell more than 22 per cent today as the Athens market continued to tumble following Syriza's victory in the general election on Sunday. 

Bank stocks have fallen by a total of 40 per cent since the weekend election, which saw leftist leader Alexis Tsipras become Prime Minister with his anti-austerity party. Tsipras immediately formed a coalition with the right-wing Independent Greeks.

Fears that Greek banks, facing increased deposit outflows, could be shut out of European Central Bank liquidity assistance if their assets were no longer accepted as collateral have led to a rout as investors dump financial stocks.

Tsipras' new government has defied expectations it would be wary of upsetting European and International Monetary Fund creditors after the election. It immediately halted planned privatisations of Greece's biggest port and biggest utility ahead of talks on renegotiating its bailout conditions.


The moves, made without consulting lenders, highlighted the risk of a breakdown in the talks, with a succession of German politicians warning that bailout terms must be respected.

"The floor is zero if things go badly in the negotiations between the new government and the rest of the euro zone," Simon Maughan, head of research at OTAS Technologies, told Reuters.

"Should their collateral be disqualified by the ECB, they will have no money, and a bank with no money is not a bank."

A floor may not be reached until the outcome of the negotiations is known, he added.

New Finance Minister Yanis Varoufakis said he believed common ground could be found but talks would not be easy.

The 22 per cent drop in the main bank sub-index brought losses so far this week to 40 per cent, with the main Athens index down more than 8 per cent.

Additional reporting by Reuters