Deutsche Bank outlines 4 key scenarios following the victory of the ‘No’ vote in today’s Greek referendum.
N1 – Soft deal: “The most unlikely scenario is that the euro-area partners offer a much softer programme to Greece,” DB argues.
N2 – Default-and-stay: “Moderately less unlikely is a scenario where Greece defaults but stays in the euro thanks to a direct recapitalisation of Greek banks by the euro-area partners, with the Greek government using only domestic resources for the country’s fiscal needs,” DB adds.
N3 – New deal: “The third scenario is one in which the rising economic and political cost of a closed banking system results in the Syriza government being replaced by a new government of national unity and a new deal with creditors being reached,” DB clarifies.
N4 – Grexit: “In our view, Grexit and Scenario N3 are the most likely – with about equal probabilities. That said, we see the probability of Grexit increasing the larger is the margin of victory of the NO vote. Even with a NO vote, the cumulative probability of the first three scenarios still exceeds that of Grexit,” DB argues.