Participants at a private meeting in Davos, which included CEOs from JPMorgan Chase & Co, Barclays, Citigroup and UBS, acknowledged there had been significant progress. Most pointed to the European Central Bank’s launching last month of half a trillion euros in cheap 3-year loans as a possible turning point after almost three years of market chaos that has threatened some of the sector’s biggest players.
“2011 was a year of great fear around (sovereign debt risk). Going into 2012 we feel somewhat more comfortable because progress has been made,” Barclays’ chief executive Bob Diamond told Reuters on the sidelines of the closed-door meeting.
He said the overall mood was cautious given the growth challenges the euro zone was still facing.
But bankers praised the progress made in pushing toward a euro zone fiscal union and on solving the European banks’ funding and liquidity problems through cheap central bank money.
“The ECB (injection of 3-year loans) was a significant thing which took the major risk off the table, in the bank liquidity problem.,” JP Morgan chief executive Jamie Dimon said earlier in the day.
He said he saw “zero” risks to the solvency of banks from the Greek crisis, even if they trigger credit default swaps which would be the most likely to cause ripple effects across global markets.
Greece’s tortuous negotiations over a debt swap with private creditors entered a new phase on Thursday with focus on how much the European Central Bank and other public creditors may need to contribute.
Diamond also said bankers were still hoping that the Greek crisis was increasingly viewed as a specific and isolated case inside the euro zone and would be resolved through an orderly default.
“Consensus in the room was that there will be an orderly default on Greece. On the rest of the euro zone there is not a great deal of concern,” the CEO of a large Swiss bank said.
But despite signs of optimism, executives said US bankers were still more cautious about the outlook for the euro zone.
“The Americans are the most negative. They do not really understand how the euro zone works,” said the CEO of a large euro zone bank.
JPM’s Dimon, who did not stay for the entire meeting, said, “How many people have you got in the room? That is how many views you have,” when asked about the consensus on the euro crisis.
The so called financial services governor’s meeting at the World Economic Forum is a yearly feature where top industry executives from around the world sit down for a conversation about some of the major issues facing the sector.
Bankers said besides the sovereign debt crisis, this year the agenda included issues such as regulation and policy, job creation and growth.
“The financial services community is excited about engaging with governments in jurisdictions where the governments are prepared to engage because I think the only way forward is collaborative solutions and I think that was a very positive tone,” said NYSE Euronext CEO Duncan Niederauer.
Late in the meeting on Thursday, the CEOs were also joined by some policy makers, including Min Zhu, deputy managing director of the International Monetary Fund. Another meeting is scheduled for Saturday.
Other CEOs in the room included Prudential Plc’s Tidjane Thiam, Julius Baer’s Boris Collardi, Credit Suisse’s Brady Dougan and Intesa Sanpaolo’s Enrico Cucchiani.
“It’s always a good meeting. We know each other well,” Thiam said, on his way to a bathroom break at the marathon meeting, which started at 12:30 in the afternoon and was going on as late as 4 p.m. local time. “So it’s a good, constructive conversation.”
