Blackstone CEO says euro zone could contain ‘Grexit’ contagion

Greece has appealed to its euro zone partners and the European Central Bank to keep it afloat after defaulting on its debt to the International Monetary Fund and losing frozen international bailout money.

Schwarzman, CEO and chairman of Blackstone, said Greece’s banking system could collapse if voters rejected the bailout’s terms.

“There have been some very significant changes since 2010 and the euro zone is much, much better prepared,” he told journalists.

“I would be surprised if it [the Greek referendum] were not a strong ‘Yes’ vote because the country is at real risk in terms of stability of their financial institutions and their economy,” Schwarzman said.

Blackstone has $310 billion of assets under management and is the largest purchaser of distressed assets in the world.

Schwarzman said that if Greeks vote “No” in Sunday’s referendum on bailout terms offered by its international creditors, Athens and Europe would face a “highly complex series of issues”. Banks are already closed and capital controls were imposed in Greece last weekend.

“Their financial system would have to be supported. If not, the pattern of withdrawals that have been fully covered by ECB loans would suggest that without those loans, you would have a collapse of the banking system,” he said.

“How the ECB and Europe would transition that is something I don’t know but would have to be worked out.”

Speaking in Ireland, the “great winners” of the crisis having completed a bailout in 2013, Schwarzman would not comment on whether Blackstone would look at any investment opportunities in Greece once markets reopen.

“I think it depends on who you are,” Schwarzman said of any buy opportunities.

Schwarzman added that Blackstone was not advising Greece, its banks or its creditors through the current crisis.

(Reporting by Padraic Halpin)