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Lloyd's 'has plans for euro collapse'

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Lloyd's 'has plans for euro collapse'

The insurance market Lloyd’s of London is preparing contingency plans for the possibility of the euro collapsing, its chief executive has said.

With Greece facing new elections in June and anti-bailout feelings high, there are fears Athens may be forced to exit the eurozone.

In a Sunday Telegraph interview, Richard Ward said Lloyd’s needs to “prepare for that eventuality”.

He said that Lloyd’s would settle claims using multiple currencies.

Mr Ward is one of the first bosses of a large UK business to admit he is planning for the end of the euro.

Lloyd’s of London is a market in which syndicates meet brokers and agree to take on particular risks.

‘Quite worried’

Greece has implemented tough austerity measures in return for two multi-billion-euro bailouts, but five years of recession has seen the Greek people become increasingly opposed to pro-austerity politicians.

Many analysts think that Greece may abandon the austerity measures and be forced out of the euro if the leftist bloc Syriza, which came second in Greece’s 6 May election, wins on 17 June.

This could potentially trigger a run on banks not only in Greece but in other eurozone nations.

“We’ve got multi-currency functionality and we would switch to multi-currency settlement if the Greeks abandoned the euro and started using the drachma again,” Mr Ward told the newspaper.

“I don’t think that if Greece exited the euro it would lead to the collapse of the eurozone, but what we need to do is prepare for that eventuality.”

He added: “I’m quite worried about Europe.”

In March, Lloyd’s announced a loss of £516m for 2011, saying it was its worst year for catastrophe claims such as the earthquake and tsunami in Japan and the earthquake in New Zealand.

Euro woes

Mr Ward’s comments come as more  and more politicians and business leaders talk of a Greek exit.

In an interview with the Guardian newspaper, the head of the International Monetary Fund urged Greeks to pay taxes.

Christine Lagarde also suggested it was payback time for Greece.

In addition to a Greek exit, investors are also worried about what would happen if other ailing economies like Spain and Italy followed suit.

On Friday, Spain’s Bankia said it needed 19bn euros more from the government – the biggest bailout ever – as it and fellow regional banks struggle under a mountain of bad property debt.

Stocks have fallen over the past few weeks while on Friday the euro tumbled to under $1.25 for the first time since July 2010.

Source: BBC

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