NEWS, 28.05.2012.

Greek Exit Fears Cause Wealthy Greeks To Transfer Money To Safer Northern Banks

 

After Greece's inconclusive elections on May 6 led to political deadlock and heightened doubts about the country's future in the euro zone, Nikos, a successful businessman in the pharmaceutical supply industry, sent 7 million euros to a bank in Luxembourg."I have worked hard all my life and took risks in business. I am 62 years old now and cannot risk my money becoming drachmas. Most Greeks want to stay in the euro, that's what polls show, but it's better to be safe than sorry," he said.His precaution reflects a trend among southern Europe's wealthy. Greeks fear devaluation while Spaniards and Portuguese fret about the health of their banks so they are sending money to banks in the stronger economies of northern Europe.Nikos sent his cash to a Swiss bank offering much lower interest rates than his Greek bank paid but he said the sacrifice is worth it for peace of mind.Financial advisers and private bankers whose clients have accounts too large to be covered by a Europe-wide guarantee on deposits up to 100,000 euros, are reporting a "bank run by wire transfer" that has picked up during May.Much of this money has headed north to banks in London, Frankfurt and Geneva, financial advisers say."It's been an ongoing process but it certainly picked up pace a couple of weeks ago We believe there is a continuous 2-3 year bank run by wire transfer," said Lorne Baring, managing director at B Capital, a Geneva-based pan European wealth management firm."Where there is liquidity it is moving to the safest part of Europe and the perceived safest part of Europe is in the North... It's a no brainer," he said.Another private banker specialising in Spanish clients at a global banking group said Spain's wealthy remembered Argentina's 'corralito' a decade ago when authorities restricted withdrawals to prevent bank runs."We are taking calls from new clients who want part of their money outside of Spain because of the potential risk of a corralito though we don't think that will happen and we don't incentivise our clients to do that," the banker said.As deposits in European banks are guaranteed up to 100,000 euros, all but the wealthiest savers would get their money back in the event of a bank failure.But if a country left the euro, as economists think could happen to Greece, bank accounts would be redenominated into a new currency that could then devalue, eroding the value of deposits.Depositors could also face controls to prevent capital flight and further devaluation, or a freeze on withdrawals to defend the banks.One senior private banker based in London said colleagues had taken calls from Greeks "very keen" to open accounts in the UK to protect their wealth if Greece leaves the euro and returns to its old currency, the drachma.However, there is much legal uncertainty surrounding a potential exit from the euro zone and lawyers say moving money abroad may not necessarily protect it from conversion into the new currency."It is clear that Greek investors are looking to find ways to hold euros that will not get converted into drachmas," said Damian Bloom, partner at law firm Berwin Leighton Paisner."There is a concern whether euro deposits held by a Greek person in a non-Greek account would also get converted, or indeed whether Greek issued euro notes held by non-Greek persons would be converted. I don't know if these practical issues have yet been resolved."

Britain's Blair faces grilling over ties to Murdoch

 

Tony Blair's decision to openly court Rupert Murdoch to win power and ensure favourable coverage during his decade-long tenure as British prime minister will come under scrutiny when he faces a media inquiry today.The inquiry, ordered by Prime Minister David Cameron after Murdoch's now defunct News of the World tabloid admitted hacking phones, has tarnished Britain's elite by laying bare the collusion between politicians, the police and the media.Blair kicks off an important week at the Leveson inquiry by answering questions about his often obsessive media management which included courting Murdoch.The inquiry has so far focused on the conduct of the media and the close ties between Murdoch's empire and serving ministers, helping the opposition Labour Party leader Ed Miliband consolidate his position with attacks on Cameron.But the grilling of Blair, who recast the relationship between the media and politicians by 'spinning' news to gain the most favourable coverage, could undermine Miliband's attempt to portray Labour as a party above courting media tycoons.While Blair is no longer active in British politics, the inquiry may still prove uncomfortable as it examines issues such as his decision after stepping down as prime minister to become a godfather to Murdoch's daughter Grace at a ceremony on the banks of the river Jordan."Blair led the way in having no shame about courting Murdoch," said Ivor Gaber, professor of political journalism at City university."He set the style and the standard and if you regard Cameron as the 'heir to Blair' then it's not exactly surprising that he followed suit."Murdoch told the inquiry last month that he had never asked a prime minister for anything.Blair set the tone for his relationship with Britain's press when he flew to Australia in 1995 to speak before a gathering of Murdoch's executives who had previously used their British tabloids to vilify his Labour Party predecessors.The decision infuriated much of his left-of-centre party who saw the Australian-born tycoon as a right-winger who had helped to keep them out of power for years."People would be horrified," Blair said later in his autobiography. "On the other hand ... not to go was to say carry on and do your worst, and we knew their worst was very bad indeed.""The country's most powerful newspaper proprietor, whose publications have hitherto been rancorous in their opposition to the Labour party, invites us into the lion's den. You go, don't you?"The speech received a standing ovation and Murdoch indicated for the first time that he could be willing to switch the allegiance of his newspapers to the Labour Party."If our flirtation is ever consummated Tony then I suspect we will end up making love like porcupines, very, very carefully," he told him.With the backing of Murdoch's top-selling Sun tabloid, Blair swept to power in 1997 and again in 2001 and 2005. But with an ever increasing reputation for public relations 'spin', he started to face questions over his sincerity."Tony Blair quickly became famous in Fleet Street for inviting in one group of newspaper people and telling them how sceptical he was about Europe; and then inviting in another lot and telling them how keen he was on Europe," Andrew Marr, a senior BBC journalist, told the inquiry."But the different groups compared notes, and his reputation was not hugely enhanced."Much of that came to a head when Blair and then US President George W. Bush agreed to invade Iraq, going against the public opinion in Britain.Blair is likely to be asked why he spoke to Murdoch three times in the days leading up to the Iraq war and whether this had any impact on the fact that all Murdoch's papers supported the unpopular invasion.He will also be asked whether his reliance on Britain's press meant that he did not properly scrutinise their role in society and whether any group, such as Murdoch's News International, had too much control of the market."There was a desperation to get the Sun onside and to get News International on side, basically at all costs," Liverpool University's political professor Jonathan Tonge, told Reuters."And if that meant sacrificing a serious analysis of the relationship and the health of the relationship, then so be it."