Societe Generale SA’s chief executive officer downplayed any risk of Greece’s financial crisis rippling through Europe, saying banks and the economy are in much better shape than when the issue flared up five years ago.
“Whatever the scenario is at the end of the day, the euro zone can handle this scenario,” CEO Frederic Oudea said Thursday in an interview with Bloomberg Television’s Yvonne Man in Hong Kong. “The situation in terms of the structure of the banks, the exposure to Greece and the Greek economy is totally different.”
Oudea, 51, said that the European Central Bank’s purchases of sovereign debt in the region will limit any risk of contagion. He said any deal between Greece and its creditors must take into account “consistent implementation of reforms” by the nation as well as what is feasible for the Greek people.
Greece this week became the first advanced economy to miss payment to the International Monetary Fund after closing its banks ahead of a referendum on austerity. Prime Minister Alexis Tsipras, who’s urging citizens to vote “no,” made a bid for a compromise with creditors Wednesday that was rejected by the euro region.
“We’ve seen some very positive examples in Europe,” Oudea said. “If you take Ireland for example, it’s implemented reform, it went through difficult times, but it’s got much better. You could talk about Spain as well.”
For now, markets indicate investors trust policy makers’ efforts to keep Greece in the euro after more than five years of crisis and two bailouts. The currency strengthened 3.9 percent against the dollar in the three months ended June, the biggest gain in seven quarters.
Oudea said he expects the euro will weaken slightly in the next 18 months to about 1.05 per dollar. The shared currency traded at 1.1048 at 11:01 a.m. in Tokyo.