UniCredit exec says euro "practically dead"

(Reuters) - The euro is dead and cannot be saved, while Greece will inevitably default, Attila Szalay-Berzeviczy, Head of Global Securities Services at UniCredit Group wrote in an article on a Hungarian website on Wednesday.

Szalay-Berzeviczy signed the article as former head of the Budapest Stock Exchange.

"The common currency of Europe is practically dead," he said in a long article posted on news website Index.hu.

A UniCredit spokesperson said, "The comments expressed by Mr Szalay-Berzeviczy are his own personal view and do not reflect the position of the company".

Szalay-Berzeviczy said the only remaining question now was "for how many days the hopeless rearguard fight of European governments and the European Central Bank can keep up Greece's spirits."

"As the moment when Greece declares default, Europe can be shaken by an earthquake of magnitude 10, which will bring the onset of an entirely new era in the life of the old Continent," Szalay-Berzeviczy wrote.

Szalay-Berzeviczy signed the article as former head of the Budapest Stock Exchange. He could not immediately be reached for comments.

He said Greece's default will mean that the state will not be able to pay wages to its employees and will not pay pensions for quite a while, which would lead to a rush to banks' cash-machines.

"With the government securities stuck with local banks becoming worthless, an immediate liquidity crisis will lead to the total collapse of the Greek banking system," he said.

"So the savings of depositors will also be lost as the Greek state's deposit guarantee will no longer be available."

Szalay-Berzeviczy said in this case, this "catastrophe" would very quickly spread to the entire euro zone, Europe and would also shake the world, with contagion spreading via the banking system under such a scenario.

Banks could be forced to close credit lines to other banks which are exposed to countries where investors believe the "Greek lighting" may strike again.

He said depositors could start withdrawing money from weak banks of weak countries, which could push some banks into liquidity crises and those banks which do not have stable capital or a strong state backing them up, could go bust.

This escalating panic could sweep across Europe in a "self-fulfilling" way, which could lead to the breakup of the euro zone.

"Of course, Angela Merkel, Nicolas Sarkozy and Jose Manuel Barroso keep repeating every day that the...euro will stay, as an alternative to that would mean huge costs for each member state," he said.

"But a key characteristics of the breakup of the eurozone will presumably be that it will not be the result of a process managed out of Brussels, but will be the result of a financial apocalypse which arrives as an uninvited guest," he added.

Szalay-Berzeviczy was the chairman of the Budapest Stock Exchange until 2008.
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