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Greek exit from euro unlikely

FRANKFURT - Deutsche Bank thinks it is unlikely that elections in Greece this weekend will lead the heavily-indebted country to leave the euro, the chief financial officer of Germany’s biggest bank said on Thursday.

“The probability is very, very low. It is unlikely,” Stefan Krause said at a conference.

However, Deutsche Bank has run through “what if” scenarios ahead of the Sunday elections, where politicians backing and opposing an international bailout are thought to be running neck-and-neck.

“Greece would then have to introduce capital controls. We don’t know how these domino stones will fall,” Krause said, referring to what might happen if Greece did leave the euro.

Financial markets continue to be volatile, reflecting deep investor anxiety about the consequences if Greeks vote against painful austerity measures.

“Never in the 13-year history of the euro has the unity of the common currency been so uncertain,” Krause said.

German banks are preparing for a worst-case scenario should Greek voters chose a path that leads them out of the euro zone.

Speaking at the same conference, Allianz SE chief economist Michael Heise said Greece would recover faster within the euro than outside of it.

“The low point of economic slowdown is not too far off,” Heise predicted.

An exit would have disruptive consequences which cannot be forecast and bear significant risks, he added.

Markets will likely then focus on Italy and France, Heise said, a reason to press ahead with further European integration.

Separately, Krause said Deutsche Bank’s refinancing costs would not change significantly in the wake of a possible Moody’s downgrade because the lender’s refinancing costs are primarily influenced by the price of credit default swaps.

Deutsche Bank has for years been able to refinance itself cheaper than the price implied by individual ratings, Krause added.