Economics

Greece: what if?

● Time is running out for Greece: While Greek voters support Syriza and its Key Macro Views reports programme, according to polls, they are not betting their money on it. Deposit outflows could make the banking system illiquid any day now and delayed tax payments could starve the government of cash as early as March. Understanding Germany ––– a last golden decade ● We see a 65% chance that Greece will stay in the euro: The chance of Greece’s ahead Prime Minister Alexis Tsipras making a U-turn remains 45%, in our view. We raise 13 October 2010 our forecast for the probability of a change in government in Athens to a more pro-European coalition from 15% to 20%. By contrast, we can by now almost rule Euro crisis: The role of out the scenario of Greece partly defaulting but staying in the euro (previously the ECB 5%). Mr Tsipras’s new economic crisis makes achieving the necessary primary 29 July 2011 surpluses virtually impossible. Saving the euro: The That leaves a 35% risk of Greek default and euro exit: ● In practice, this could case for an ECB yield cap happen in two ways: (1) the double populist coalition rejects the Eurozone offer 26 June 2012 and starts printing money; (2) Mr Tsipras calls a referendum which concludes in a vote for exit, despite 80% of Greeks currently wanting to stay. ECB ABS purchases: ● Capital controls are becoming more likely: They would almost certainly expanding the toolbox accompany Grexit. Even in the more-benign scenarios, the combination of 8 May 2013 recession, outflows and, potentially, new elections might require at least a mild Mind the court: the top form of capital control. We see a 55% chance for some form of capital controls. event risk in Europe ● But what if the worst happens?: In this report we look at the potential short-term 31 May 2013 and long-term fallout from Grexit for Greece and the Eurozone. The lessons of the crisis: ● In the first few months after the exit decision, Greece would have to survive a what Europe needs collapse of its financial system amid widespread default. Economic uncertainty 27 June 2014 and capital controls would trigger severe output contraction. ECB: question is not if, ● The Eurozone might face some financial market turbulence: However, the ECB’s but when and what? sovereign bond purchases should limit the risk of contagion. European banks are 2 December 2014 awash with liquidity, so a massive deposit outflow is unlikely. A dip in economic confidence could delay the economic recovery, but probably not for long. Euro Plus Monitor 2014: ● In the longer run, Greece’s future outside the Eurozone would depend on its from pain to gain policy choices. A Venezuela/Argentina scenario of years of populist leadership 18 December 2014 eroding economic foundations looks most likely. Retaining or quickly regaining Global Outlook 2015: Oil, EU membership would be crucial for Greece. Putin and Greece ● While in theory, a sharp devaluation would make Greece’s economy more cost 6 January 2014 competitive, massive inflation would impoverish large parts of Greek society: In order to maintain its grip on power, Syriza – whose leaders are not great believers QE works: lessons from in central bank independence anyway – might print money to fund expensive the UK and US social policies. 16 January 2014 ● Greece has structural problems beyond the euro; these will not go away: Such Greek election: reality problems include the rigid labour market, the ineffective public sector and shock ahead powerful vested interests closing off services sectors. Tackling these will be even 26 January 2014 more difficult without the external pressure from Greece’s European and international partners. ● Long-term consequences for the Eurozone would be mixed: On the one hand, Grexit could set a dangerous precedent. It could lead to higher risk premiums and, thus, borrowing costs in parts of the periphery. On the other hand, it would give bite to Europe’s rules. It would raise the incentives for good macro policies to safeguard euro membership and would deflate populists. ● Greece has a much better chance of turning the corner inside the sometimes restrictive but ultimately healthy Eurozone corset. Germany, the Netherlands, Spain, Portugal or Ireland all worked through domestic troubles and structural problems within the Eurozone. Greece can, too. 19 February 2015

Dr Christian Schulz Senior Economist +44 20 3207 7878 [email protected]

Economics

Greek short-term: making the disorderly orderly

The negotiations between Greece and its creditors remain deadlocked: Some of the arguments may boil down to semantics, such as the question of whether the troika should be renamed. At the margin, the question of how debt relief could be handled at a later stage might be surmountable. But there are many crucial issues of substance that will be difficult to resolve. The Greek government is seeking temporary funding to sustain its expenditure and banking system while it is reversing structural reforms, such as the liberalisation of the labour market. At a later stage, it could seek more funding to reverse the public sector cutbacks and increase social spending. In contrast, the Eurozone is offering Greece funding to complete the adjustment programme with only small, face-saving changes. But what if the Greek government rejects that offer? Already, Greece’s economy is suffering badly. Business confidence tanked in January and banks are facing severe outflows of deposits. Even if businesses still wanted to invest, banks are probably cutting back lending severely in order to preserve liquidity. Likewise, households will be hanging on to the cash they have withdrawn from their accounts, cutting consumer spending. Government finances are also in deep trouble. Tax revenues had fallen €1bn short of expectations in January already and are likely to have deteriorated since, as citizens decide not to pay some taxes in anticipation of Syriza abolishing them anyway. The primary surplus the Samaras government had delivered under enormous labours is history. Even without the upcoming loan redemptions and interest payments, the administration will struggle to keep up payments of pensions and salaries for long. Without an official support programme for Greece, the ECB would be forced to withdraw its authorisation of emergency liquidity assistance (ELA) eventually. While there is no direct connection between ELA and the bail-out, the renewed Greek recession is likely to turn the Greek banks’ liquidity issue into a solvency problem. Even if Greece eventually secures an agreement, a mild form of capital control might have to be imposed, particularly if the coalition breaks apart and new elections are called. Greece would have to recapitalise its banks, for which it does not have the money. Without even the prospect of a bail-out agreement, the ECB would cut Greek banks of their liquidity life-line. Greece would have to impose capital controls, which would aggravate the economic downturn massively. This situation would be unsustainable.

How Grexit could happen: referendum or no referendum? How do you exit the euro? It has never been done before. In theory, a Greek euro exit could happen by stealth. As the government runs out of money to pay its day-to-day bills, wages and salaries, it may decide to issue IOUs. To persuade people to accept them instead of euros, the government would have to give them a value by, for example, accepting them to settle tax bills. That would effectively make them a parallel legal tender and thus the nucleus of a new currency: “drachmas”. However, Grexit by stealth is unlikely in our view. A euro exit would be an extremely important political decision. There are two stylised scenarios for this. A simple vote in parliament: The Tsipras government rejects the Eurozone’s offer for help. After a vote in parliament, where Syriza and ANEL have a comfortable majority of 162 to 138, Mr Tsipras orders severe capital controls and tells the Greek central bank to print drachmas to fund Syriza’s pre-election promises. While the banking system is closed, Greece would convert deposits and loans into drachmas and stamp euro notes. After a few days, banks would re-open. This option has a legitimacy problem, however. Euro exit was not part of Mr Tsipras’s pre-election promises and polls give him no mandate for it. Some of the Syriza parliamentarians might not follow Mr Tsipras in parliament. Instead, they might support the pro-European opposition of the New Democracy, Pasok and Potami parties in a constructive vote of no-confidence, removing the Tsipras administration and installing a new pro-European government of national unity. Mr Tsipras may not survive a unilateral attempt to take Greece out of the euro politically. Referendum : Under this scenario, Mr Tsipras would call a referendum over euro membership as quickly as possible. With more than 80% of Greeks supporting Mr Tsipras’s demands and a similar share supporting euro membership, one side would have to give. A referendum might be a clean way to decide. Greece has not had a referendum in 40 years, but parliament could call one with a simple majority and hold it within 30 days. However,

2 Economics

by the time the referendum is actually held, all euros might have left Greece already. To prevent that, severe capital controls would need to be imposed. The entire economy would be running on empty or, effectively, barter trade during that period. That would give voters a taste of what is to come. It may potentially help to persuade Greece to stay. In addition, we expect the Eurozone to offer just enough face-saving compromises to sway the referendum. However, we cannot exclude the risk that the disappointment in Greece over the perceived lack of flexibility prompts Greeks to take the risk of plunging into the unchartered waters of euro exit.

Greece would need to restore its financial system quickly Once the Grexit decision has been taken, Greece would need to come through the inevitable collapse of its financial system and restore it as quickly as possible. Ahead of the forced conversion, capital flight would intensify. The reported decline in Greek deposits by €21bn since the beginning of December (see chart below) would just be the beginning if Grexit were to become an even bigger threat. The Greek banking system would have to be closed down for some time until deposits and loans are redenominated as drachmas. Domestic, euro bank notes might be stamped “drachma”, Greek euro coins may become drachma coins. It would probably take months to print and coin the new currency. The forced conversion is likely to bankrupt many companies and banks with an asset- liability mismatch, ie those with large domestic assets but external loans. Normal bankruptcy law would apply to resolve most cases and leave creditors with significant losses. Some of the collateral, such as buildings and machines, may be sold to satisfy the creditors. This might erode Greece’s productive capital further. As virtually all government debt is also under foreign law, the government would have to declare bankruptcy and would be unable to help companies and banks with their euro liabilities. A major risk could be long-lasting legal proceedings, making it difficult to find buyers for companies as these businesses might face future legal challenges. The government itself might face years of legal uncertainty, which would weigh heavily on prospects for a return to capital markets, as the example of Argentina shows. Even if the financial system is managed as well as possible under the circumstances, we expect the cash drought and capital controls to set off a sharp recession in Greece. GDP may decline by another 5-10%. The economy might be particularly severely hit if Grexit and the economic chaos coincide with the beginning of the summer holiday season, which would probably lead to large numbers of cancellations from tourists. A major pitfall for a “smooth” Greek euro exit could be that, according to much of the relevant literature (see Athanassiou, 20091), it would potentially also entail forced exit from the EU and thus the world’s largest internal market. In that case, Greece would also forgo the EU cohesion and rural development funds, which would amount to a loss of €20bn (equal to on average 1% of GDP per year) in 2014-20. The EU may find ways to keep Greece in, for instance by negotiating re-accession to the EU after a “logical second” during euro exit. However, the process might be tricky, since it involves not just the Eurozone but the EU as a whole. Some countries, such as the UK, may exploit the opportunity to further their own agendas. Grexit could open the Pandora’s box of treaty renegotiation.

1 P Athanassiou (2009) „Withdrawal and expulsion from the EU and EMU“, ECB legal working paper series, No. 10, December 2009. 3 Economics

Eurozone short-term: panic unlikely in QE world

Would Grexit spark a catastrophic run on bank deposits and public sector debt in the periphery? We think not. 2015 is not 2012. The Eurozone has well-oiled rescue machinery in place to contain financial and economic contagion from Grexit. Of course, a Greek euro exit could still, at least temporarily, shake investors’ and companies’ trust in the Eurozone staying together. Investors might pull out of assets in other Eurozone countries seen as vulnerable, such as Portugal, Ireland, Spain or Italy. However, financial market contagion is unlikely to last very long in the Eurozone’s new quantitative easing (QE) world. With the ECB about to start purchasing up to €60bn in government bonds each month, holders of Spanish and other “peripheral” bonds are unlikely to panic. If they do, the Eurozone could give countries emergency credit lines through the €500bn European Stability Mechanism (ESM). In major emergencies, this would be beefed up by the ECB’s outright monetary transactions (OMT) commitment to purchasing potentially unlimited amounts of bonds in order to restore monetary policy transmission. With this kind of firepower in the background, any financial market contagion effect would be short-lived – as long as countries do not deviate from the reform path. Eurozone banks are much safer after the ECB’s comprehensive assessment. The ECB is flooding the financial system with liquidity, which should effectively mitigate and, thus, implicitly avert any bank run. One risk is that credit rating agencies respond by factoring in higher probabilities for euro exit in other countries’ credit scores. If any country falls into junk territory, this might force it into an ESM bail-out to sustain its banks’ access to ECB funding. That could be politically tricky, especially for large countries such as Italy. However, Italy’s and Spain’s highest credit ratings are currently three notches above junk territory and thus probably safe. In the case of Spain, rating momentum has been upward recently. For Portugal, Grexit might temporarily delay the long-awaited full return to investment grade.

The losses: €350bn at stake Greece exiting the euro would be an expensive affair. Via bilateral loans from the first bail- out and the European Financial Stability Facility (EFSF) loans of the second bail-out, Eurozone taxpayers have directly lent €195bn to Greece (see table). In addition, the IMF, in which Eurozone countries excluding Greece hold 23% of the shares, has lent €31bn to Greece. The ECB had Greek government bonds with a face value of €28bn in its book at the end of 2013, although redemptions have probably reduced that sum significantly towards €20bn since then. With the IMF senior to other bond holders, most losses would have to be borne by the EFSF and Eurozone members. Lending to Greece is already largely accounted for in the gross debt ratios under the Maastricht criterion (Eurostat reports that inter-governmental lending in the context of the financial crisis accounted for €241bn or 2.4ppt of the Eurozone debt ratio of 92.1% of GDP in Q3 2014) and would therefore not change debt ratios much. However, countries would lose future repayments and thus be forced to report higher deficits. With Greek interest payments delayed until 2022 anyway, and repayments not starting earlier, there would be no impact on Eurozone public finances for years, however. The only real damage would be political, as Eurosceptics could point to the losses as a cost of euro membership.

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Table: international exposures to Greece

Exposure €bn First bailbail----outout 73.0 Bilateral loans 52.9 IMF 20.1 Second bailbail----outout 152.9 EFSF 141.9 IMF 11.0 ECB 92.7 SMP Bond purchases 27.7 TARGET2 Balance 65.0 MRO/LTRO 0.0 Total EU/IMF official 318.6 Private sector 34.2 Bank to government 18.7 Bank to bank 1.8 Total 352.8

Notes: the Bank of Greece’s emergency liquidity assistance facility is an exposure of Greece’s taxpayers. However, the ELAs form an upper limit for the TARGET2 deficit. We assume TARGET2 balances to have reached the ELA threshold, which reportedly was €65bn at the time of writing. Sources: EFSF, German finance ministry, IMF, Bank of Greece, BIS

Beyond the Greek bonds the ECB holds outright, it is exposed to a Greek default risk via its monetary policy operations with Greek banks. The ECB has cut its direct exposure to Greek banks with the decision on 11 February to remove Greek assets from the list of eligible collateral. As a result, the €54bn the ECB had previously lent to Greek banks has, by now, probably been moved to the €65bn Bank of Greece’s emergency liquidity assistance facility. This is on the balance sheet of the Bank of Greece and would, thus, be converted into Drachmas. However, some of the lending to Greek banks may have been moved out of the country via the ECB’s payment system, TARGET2. At the peak of the crisis in 2012, Greece had amassed a deficit of €110bn in TARGET2. In December 2014, the TARGET2 deficit was only €49bn, but it is likely to have increased significantly again towards the ELA threshold of €65bn by now. It is not clear what would happen with the TARGET2 balances in the case of Grexit, but they would increase European exposure to Greece. Assuming the TARGET2 deficit is €65bn by the time of Grexit and is lost in full, the ECB, which has capital and reserves of €95bn (Eurosystem) would have to be recapitalised. That could happen immediately or, more likely, by taxpayers forgoing dividend payments for a number of years. Private sector exposures to Greece are small: According to BIS data, European banks held only €34bn in claims on the Greek government, banks and the non-financial private sector in September 2014. This was 0.2% of their total international claims of €16trn. In the very unlikely case that such a small exposure causes any bank to struggle, Europe has more than enough tools in place to deal with that. The direct economic consequences of Greece’s euro exit are also likely to be small: The Greek economy accounted for merely 1.9% of Eurozone GDP; in 2014 Greece ranked as Germany’s 40th most-important trading partner, receiving 0.4% of German exports. Even a severe recession of 10% of GDP, with imports falling by 30-50% in one year, would reduce German exports by merely 0.2% and GDP by 0.1%. As we have seen in the past, however, the mere confidence shock could halt the Eurozone’s recovery for a while. Having experienced Grexit, companies in other southern European countries may abstain from investing in their economies given the political fragilities. That would hold back growth and job creation and slow down fiscal progress as well in parts of the periphery. The ECB could react to such a scenario with even more monetary stimulus, although that might have limited additional impact. Potentially, in such a case the Eurozone would loosen the fiscal reins a little in order to provide a fiscal boost to kick-start the economy Ironically, Grexit might then trigger the fiscal boost some have said would be necessary to prevent Grexit from happening in the first place.

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Some observers fear (or hope) that Grexit would become a geopolitical risk for the EU and the West because Russia or China might step in and increase their influence in the Mediterranean by funding the new government. That gives the EU a clear incentive to find legal ways either to maintain Greece’s membership status or open negotiations for re- admission immediately.

Chart 1: New deposit flight in Greece Chart 2: credit rating – Italy and Spain three notches above junk

130 Highest rating Junk (BB+/Ba1) 120

110

100 Spain 90 Greece (GR)

80

70 Dec 2007 Dec 2008 Dec 2009 Dec 2010 Dec 2011 Dec 2012 Dec 2013 Dec 2014

Total non -financial private sector MFI deposits, € bn. Source: ECB, for Credit rating, highest from Moody’s, Standard & Poor ’s, Fitch. Source: January and February estimates based on news agency reports Bloomberg.

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The long-term for Greece: UK or Argentina?

Once the immediate shock of Grexit is digested and the financial system restored, Greece will be faced with the challenge of rebuilding trust in its economy and financial system. Depending on the choices made, Greece could hypothetically rebound like the UK did after it left the EU’s Exchange Rate Mechanism (ERM) in 1992, and grow like any low-income EU country thereafter. But Greece could also sink in an ever-accelerating inflationary spiral – as happened in Venezuela or Argentina – losing population and political stability along the way. It is too early to tell which scenario would play out, but we see a much bigger risk of an Argentina-type result as opposed to a benign situation of tough reforms to restore credibility.

UK scenario: government restores market access, enjoys competitiveness boost Eurosceptics have long provided a positive story of Greece after euro exit. A devalued currency – many forecast an initial drop by at least 50% – and much reduced public and private sector debt after a general default would put Greece in a good starting position for a dynamic recovery. An independent central bank would quickly restore credibility if it avoids the risk of an ever-continuing inflationary spiral. Good macro and fiscal policies would, over time, restore market access for funding and attract international investment. ● Tourism: Tourism in particular might benefit from increased cost competitiveness vis- à-vis Eurozone rivals, such as Spain or Italy, and attract strong inward investment from foreigners and Greeks returning capital from abroad. ● Manufacturing: Greece might attract the manufacturing bases of foreign companies, if it manages to stay in the EU. As imports become much more expensive, they might soon be substituted with domestically produced alternatives, broadening the manufacturing base and boosting employment. ● Interest savings to fuel productivity: As Greece can save the 4% of GDP it is currently spending on interest on its public debt, it could redirect the money in public investment and education, building the foundations for stronger productivity growth. ● Inflation: In the first years, high legacy unemployment and thus spare capacity would prevent inflation and, thus, a fast erosion of the newly competitive position. ● Structural funds: The sharp drop in measured wealth would qualify the country for more EU structural funds. However, there are major differences between the UK in 1992 and Greece in 2015. The UK was at the peak of macroeconomic flexibility after years of Thatcher reforms, and its ERM exit came before the reform reversals started. Greece, by contrast, has adopted some reforms but remains far away from the kind of flexibility necessary to enjoy the benefits of a weaker currency in full. For instance, inflation is likely to kick in with much higher unemployment rates, in particular if Syriza strengthens Greece’s orthodox labour unions in collective bargaining and if it raises minimum wages. In addition to Syriza making the Greek economy less flexible, being excluded from financial markets would mean years of austerity as Greece could not borrow. That leads to a different, far-less-benign scenario.

Argentina scenario: populism continuously erodes economic foundations The devaluation of Greece’s new currency, for all its potential positive impacts on cost competitiveness, will have a devastating effect on the living standards of Greece’s poor and middle classes, who will be faced with massive inflation. Wealthier households have probably already parked and protected their money abroad and can benefit from the devaluation by repatriating part of their funds to buy up assets on the cheap. However, the less well-off have little to park and repatriate. Instead their drachma incomes will be insufficient to pay for imported food and energy. For example, Greek food imports accounted for 12% of total imports, compared to only 7% in Germany. Much of that could probably be substituted with domestic produce, but that might not alleviate price pressures much as Greek farmers would prefer to sell their produce abroad at higher prices, too. To alleviate the pain, the government may be tempted to try to restore political capital by using its new-found monetary independence to print the money it needs for a lavish social assistance programme and public sector job creation. The central bank would lend directly to the government, thus creating permanent inflation.

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Price controls for food and other goods may artificially contain official inflation rates, but outsource the problem to the black market. Greece’s inflation would likely remain in double-digit territory, while the government would try to ensure its survival by blaming the rich for the failures and for keeping their money abroad. Many in Syriza have such leanings, not least the party’s chief economist John Milios, who advocates the monetisation of government debt in the Eurozone as a whole. This is the Argentina or Venezuela scenario. However, these countries can rely on their natural resources to bring in hard currency, while Greece would have to rely on tourism, which requires political stability. Restoring market access with Syriza leadership and policies would be extremely difficult, but would provide another convenient scapegoat for a populist government in Athens: international investors who do not lend to the country. The structural weaknesses of the Greek economy, especially the labour market and product market rigidities, and the stranglehold of vested interests over policy making would not go away with the euro. If nothing changes, Greece would very quickly become uncompetitive again and have to devalue once more. Successive devaluations would reduce the incentive for foreign and domestic investors to invest. This would lead to chronic underinvestment in the economy, making it more difficult for Greece to close the income gap with its European neighbours. Whether tourism can thrive in an environment of widespread poverty for large parts of the population is another open question. Staying in the EU, while it keeps open access to the biggest internal market in the world and secures transfer payments, could also prove a challenge. Greeks might be voting with their feet. If the future government failed to restore economic prosperity, the EU’s free movement of labour could swell the ranks of Greek émigrés, further undermining the long- term potential of the economy.

Political stability at risk It is difficult to predict how Greek politics would evolve in the longer-run after a Grexit. In Argentina, left wing populists managed to hold on to power despite near-permanent economic crisis by doing enough to pacify unrest. In Greece, the pro-European movement would likely be much stronger. It would probably soon win elections and improve policies. But it would still take years to get into a position of seeking re-admission to the Eurozone.

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Disclaimer

This document was compiled by the above mentioned authors of the economics department of Joh. Berenberg, Gossler & Co. KG (hereinafter referred to as “the Bank”). The Bank has made any effort to carefully research and process all information. The information has been obtained from sources which we believe to be reliable such as, for example, Thomson Reuters, Bloomberg and the relevant specialised press. However, we do not assume liability for the correctness and completeness of all information given. The provided information has not been checked by a third party, especially an independent auditing firm. We explicitly point to the stated date of preparation. The information given can become incorrect due to passage of time and/or as a result of legal, political, economic or other changes. We do not assume responsibility to indicate such changes and/or to publish an updated document. The forecasts contained in this document or other statements on rates of return, capital gains or other accession are the personal opinion of the author and we do not assume liability for the realisation of these. This document is only for information purposes. It does not constitute a financial analysis within the meaning of § 34b or § 31 Subs. 2 of the German Securities Trading Act (Wertpapierhandelsgesetz), no investment advice or recommendation to buy financial instruments. It does not replace consulting regarding legal, tax or financial matters.

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EQUITY RESEARCH Internet www.berenberg.com E-mail: [email protected] RESEARCH AEROSPACE & DEFENCE CHEMICALS HOUSEHOLD & PERSONAL CARE REAL ESTATE Andrew Gollan +44 20 3207 7891 John Klein +44 20 3207 7930 Ana Caludi Muldoon +44 20 3207 7841 Tina Kladnik +44 20 3465 2716 Tom O'Donnell +44 20 3465 2668 Evgenia Molotova +44 20 3465 2664 Bassel Choughari +44 20 3465 2675 Kai Klose +44 20 3207 7888 Jaideep Pandya +44 20 3207 7890 James Targett +44 20 3207 7873 AUTOMOTIVES TECHNOLOGY Adam Hull +44 20 3465 2749 CONSTRUCTION INSURANCE Adnaan Ahmad +44 20 3207 7851 Paul Kratz +44 20 3465 2678 Lush Mahendrarajah +44 20 3207 7896 Peter Eliot +44 20 3207 7880 Rebecca Alvey +44 20 3207 7910 Chris Moore +44 20 3465 2737 Matthew Preston +44 20 3207 7913 Gergios Kertsos +44 20 3465 2715 BANKS Robert Muir +44 20 3207 7860 Sami Taipalus +44 20 3207 7866 Daud Khan +44 20 3465 2638 Nick Anderson +44 20 3207 7838 Michael Watts +44 20 3207 7928 Gal Munda +44 20 3465 2746 Adam Barrass +44 20 3207 7923 LUXURY GOODS Tammy Qiu +44 20 3465 2673 James Chappell +44 20 3207 7844 DIVERSIFIED FINANCIALS Bassel Choughari +44 20 3465 2675 Andrew Lowe +44 20 3465 2743 Pras Jeyanandhan +44 20 3207 7899 Zuzanna Pusz +44 20 3207 7812 TELECOMMUNICATIONS Eoin Mullany +44 20 3207 7854 Wassil El Hebil +44 20 3207 7862 Eleni Papoula +44 20 3465 2741 FOOD MANUFACTURING MEDIA Usman Ghazi +44 20 3207 7824 Fintan Ryan +44 20 3465 2748 Robert Berg +44 20 3465 2680 Siyi He +44 20 3465 2697 BEVERAGES James Targett +44 20 3207 7873 Laura Janssens +44 20 3465 2639 Paul Marsch +44 20 3207 7857 Javier Gonzalez Lastra +44 20 3465 2719 Jessica Pok +44 20 3207 7907 Barry Zeitoune +44 20 3207 7859 Adam Mizrahi +44 20 3465 2653 FOOD RETAIL Sarah Simon +44 20 3207 7830 Estelle Weingrod +44 20 3207 7931 TOBACCO BUSINESS SERVICES, LEISURE & TRANSPORT MID CAP GENERAL Erik Bloomquist +44 20 3207 7870 Najet El Kassir +44 20 3207 7836 GENERAL RETAIL Robert Chantry +44 20 3207 7861 Stuart Gordon +44 20 3207 7858 Michelle Wilson +44 20 3465 2663 Gunnar Cohrs +44 20 3207 7894 UTILITIES Simon Mezzanotte +44 20 3207 7917 Sam England +44 20 3465 2687 Andrew Fisher +44 20 3207 7937 Yousuf Mohamed +44 20 3465 2672 HEALTHCARE Benjamin May +44 20 3465 2667 Mehul Mahatma +44 20 3465 2698 Matthew O'Keeffe +44 20 3207 7895 Scott Bardo +44 20 3207 7869 Virginia Nordback +44 20 3465 2693 Lawson Steele +44 20 3207 7887 Josh Puddle +44 20 3207 7881 Alistair Campbell +44 20 3207 7876 Anna Patrice +44 20 3207 7863 Graham Doyle +44 20 3465 2634 Simona Sarli +44 20 3207 7834 CAPITAL GOODS Klara Fernandes +44 20 3465 2718 Alex Deane +44 20 3465 2730 Tom Jones +44 20 3207 7877 OIL & GAS Rui Dias +44 20 3207 7823 Louise Pearson +44 20 3465 2747 Asad Farid +44 20 3207 7932 Stephan Klepp +44 20 3207 7819 Laura Sutcliffe +44 20 3465 2669 Jaideep Pandya +44 20 3207 7890 ECONOMICS Sebastian Kuenne +44 20 3207 7856 Holger Schmieding +44 20 3207 7889 Kai Mueller +44 20 3465 2681 Christian Schulz +44 20 3207 7878 Horace Tam +44 20 3465 2726 Robert Wood +44 20 3207 7822

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SPECIALIST SALES SALES (cont.) SALES (cont.) ELECTRONIC TRADING BANKS & DIVERSIFIED FINANCIALS LONDON ZURICH Matthias Führer +49 40 350 60 597 Iro Papadopoulou +44 20 3207 7924 John von Berenberg- Andrea Ferrari +41 44 283 2020 Julian Winter +49 40 350 60 463 CONSUMER Consbruch +44 20 3207 7805 Stephan Hofer +41 44 283 2029 Rupert Trotter +44 20 3207 7815 Matthew Chawner +44 20 3207 7847 Carsten Kinder +41 44 283 2024 SOVEREIGN WEALTH FUNDS HEALTHCARE Fabian De Smet +44 20 3207 7810 Gianni Lavigna +41 44 283 2038 Max von Doetinchem +44 20 3207 7826 Frazer Hall +44 20 3207 7875 Toby Flaux +44 20 3465 2745 Jamie Nettleton +41 44 283 2026 INDUSTRIALS Karl Hancock +44 20 3207 7803 Benjamin Stillfried +41 44 283 2033 CRM Chris Armstrong +44 20 3207 7809 Sean Heath +44 20 3465 2742 Edwina Lucas +44 20 3207 7908 INSURANCE David Hogg +44 20 3465 2628 SALES TRADING Ellen Parker +44 20 3465 2684 Trevor Moss +44 20 3207 7893 James Matthews +44 20 3207 7807 HAMBURG Greg Swallow +44 20 3207 7833 MEDIA & TELECOMMUNICATIONS David Mortlock +44 20 3207 7850 Sebastian Grünberg +49 40 350 60 763 Julia Thannheiser +44 20 3465 2676 Richard Payman +44 20 3207 7825 Alexander Heinz +49 40 350 60 359 INVESTOR ACCESS MATERIALS George Smibert +44 20 3207 7911 Marc Hosthausen +49 40 350 60 761 Jennie Jiricny +44 20 3207 7886 Jina Zachrisson +44 20 3207 7879 Anita Surana +44 20 3207 7855 Gregor Labahn +49 40 350 60 571 TECHNOLOGY Paul Walker +44 20 3465 2632 Patrick Schepelmann +49 40 350 60 559 EVENTS Jean Beaubois +44 20 3207 7835 Alexander Woodgate +44 20 3465 2625 Lars Schwartau +49 40 350 60 450 Charlotte Kilby +44 20 3207 7832 Marvin Schweden +49 40 350 60 576 Natalie Meech +44 20 3207 7831 PARIS Tim Storm +49 40 350 60 415 Charlotte Reeves +44 20 3465 2671 SALES Alex Chevassus +33 1 5844 9512 Philipp Wiechmann +49 40 350 60 346 Sarah Weyman +44 20 3207 7801 BENELUX Dalila Farigoule +33 1 5844 9510 Hannah Whitehead +44 20 3207 7922 Miel Bakker +44 20 3207 7808 Clémence La Clavière- LONDON Susette Mantzel +49 40 350 60 694Peyraud +33 1 5844 9521 Mike Berry +44 20 3465 2755 Alexander Wace +44 20 3465 2670 Stewart Cook +44 20 3465 2752 SCANDINAVIA Chris McKeand +44 20 3207 7938 FRANKFURT Marco Weiss +49 40 350 60 719 Simon Messman +44 20 3465 2754 Michael Brauburger +49 69 91 30 90 741 Paul Somers +44 20 3465 2753 Nina Buechs +49 69 91 30 90 735 André Grosskurth +49 69 91 30 90 734 PARIS Joerg Wenzel +49 69 91 30 90 743 Sylvain Granjoux +33 1 5844 9509

US SALES E-mail: [email protected] BERENBERG CAPITAL MARKETS LLC Colin Andrade +1 646 445 7214 Zubin Hubner +1 646 445 5572 Member FINRA & SIPC Burr Clark +1 617 292 8282 Jessica London +1 646 445 7218 CRM Julie Doherty +1 617 292 8228 Emily Mouret +1 415 802 2525 Laura Cooper +1 646 445 7201 Scott Duxbury +1 646 445 5573 Peter Nichols +1 646 445 7204 Kelleigh Faldi +1 617 292 8288 Kieran O'Sullivan +1 617 292 8292 INVESTOR ACCESS Shawna Giust +1 646 445 7216 Jonathan Saxon +1 646 445 7202 Olivia Lee +1 646 445 7212 Tristan Hedley +1 646 445 5566

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