Fairfax's potential hit from Greek exposure limited: RBC

Mon Jun 29, 2015 1:39pm EDT
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By Euan Rocha

TORONTO (Reuters) - Fairfax Financial Holdings (FFH.TO: Quote), which bet on a successful turnaround in Greece in 2014, stands to take a hit from a Greek default, but one-time gains and other factors are likely to soften the blow, RBC said in a note on Monday.

Analyst Mark Dwelle said that despite the spiraling Greek crisis, he did not expect a significant reduction to Fairfax's book value in the second quarter since certain writedowns have already been booked.

Fairfax shares were down just 1.8 percent at C$629.46 even as Canada's S&P/TSX composite index .GSPTSE fell more than 1.9 percent as investors fretted about the risk of a Greek exit from the euro.

Fairfax Chief Executive Officer Prem Watsa had told Reuters on June 19 that Fairfax's exposure to Greece would be "very manageable" even if a debt deal fails to materialize.

"We don't see this as being too much of a concern," he said, noting writedowns already booked on the value of equity stakes and the fact that the investments make up only a small part of Fairfax's overall portfolio.

Fairfax was not immediately available for comment on Monday on its exposure in the event of a default, as the breakdown in talks between Greece and its creditors pushed the country closer to a default on its loans and possibly out of the currency bloc.


A man walks past a Fairfax Holdings sign directing shareholders to the meeting, at the annual general meeting for shareholders in Toronto, April 9, 2014.  REUTERS/Mark Blinch