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The State of the European Financial Sector

Financial sectors in the U.K. and elsewhere could struggle if the euro zone st

It seems like the only thing the European economy has been exporting recently is bad news. But this year there will be a mix of events and issues that present opportunities and risks for the euro zone- and U.S.-based financial sectors, according to a brief from Nabarro.

While the Olympics

It seems like the only thing the European economy has been exporting recently is bad news. But this year there will be a mix of events and issues that present opportunities and risks for the euro zone- and U.S.-based financial sectors, according to a brief from Nabarro.

While the Olympics and Jubilee will offer some bright spots in the U.K., the outlook will not be so rosy regarding the debt crisis and proposed euro zone withdrawals. New regulations will also make operations more difficult for financial companies with ties to the EU.

"A euro zone collapse or exit would have consequences reaching far beyond the euro zone, sovereign states and banks, and would affect virtually every person and business one way or another," the authors of the brief acknowledge. In order to prepare for that possibility, businesses should start checking their exposure to see if any debtors under the euro in an "at-risk" position, and if there are any connections to financial institutions that are vulnerable to a weak European state.

Also check to see if any future transactions can be insulated against risk, "such as by specifying for termination rights on a currency redenomination," they suggest.

In a letter to The Financial Times, Mert Yildiz notes that while much of the focus has been on the western states of the continent, the "low-debt countries" of central Europe would also be seriously impacted by a euro zone recession.