Greece's biggest bank warns against euro exit
(ATHENS) - Greece's leading lender National Bank on Tuesday warned that a Greek euro exit would have disastrous effect on living standards and a nightmarish effect on unemployment and inflation.
"A euro exit would lead to a significant drop in living standards for Greek citizens," the country's premier lender said, forecasting a 55-percent fall in per capita income and a 65-percent fall in the new currency's nominal value.
Unemployment would shoot up to 34 percent from 21 percent currently, and inflation would "initially" explode to 30 percent and keep rising, the bank warned in a special report.
Greece would also be forced to renege on most of its debt to foreign creditors, it said.
And the effects would be "even worse" in the event of an uncontrolled exit from the eurozone, the bank said.
Talk of a Greek euro exit has intensified since an inconclusive May 6 election which punished political parties applying an unpopular EU-IMF recovery plan.
A Greek radical leftist party which has pledged to tear up the plan was catapulted to second place by angry voters, and is now seen as a possible victor in a new ballot set for June 17.
European leaders have threatened Athens with a loan freeze if it fails to complete structural reforms pledged in return for the multi-billion rescue package.
NBG on Monday received the lion's share of an 18-billion-euro ($22.6-billion) European rescue package designed to shore up the capital basis of Greece's top four banks after they helped the country erase nearly a third of its near and midterm debt earlier this year.
National Bank received 7.43 billion euros, Piraeus bank 4.7 billion, Eurobank 3.97 billion and Alpha 1.9 billion, the official said.
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