The Telegraph have obtained a run-down from Deutsche Bank on all the various scenarios tonight. It’s a complex set of outcomes but it is great to see them all in one place, so I will share it here:
The Yes and No scenarios from Deutsche Bank
DB have mapped out the various permutations of tonight’s referendum. There thoughts below (shorter version: it’s complicated)
A No vote:
N1 – Soft deal: The most unlikely scenario is that the euro-area partners offer a much softer programme to Greece.
N2 – Default-and-stay: Moderately less unlikely is a scenario where Greece defaults but stays in the euro thanks to a direct recapitalisation of Greek banks by the euro-area partners, with the Greek government using only domestic resources for the country’s fiscal needs.
N3 – New deal: The third scenario is one in which the rising economic and political cost of a closed banking system results in the Syriza government being replaced by a new government of national unity and a new deal with creditors being reached.
N4 – Grexit: In our view, Grexit and Scenario N3 are the most likely – with about equal probabilities. That said, we see the probability of Grexit increasing the larger is the margin of victory of the NO vote. Even with a NO vote, the cumulative probability of the first three scenarios still exceeds that of Grexit.
A Yes vote
We see two main scenarios following a YES. We think the first scenario is the least likely but its probability is not negligible.
Y1 – Political deadlock & Grexit. With a ‘YES’ vote the likelihood of Grexit will fall significantly. However, in our view it will not be negligible due to implementation risk and lack of trust. Grexit could still materialise if there a political dead lock because either (i) Syriza government remains in office but there is no agreement with creditors or (ii) Syriza resigns but a new government cannot be created in the current parliament or after new elections.
Y2 – A short-term funding deal and a more balanced third programme are agreed, yielding a higher probability of medium-term success. This scenario could also be reached via several paths, but the most likely is the formation of a new government.
Irrespective of the referendum outcome, it is unlikely that there is an immediate resolution to the crisis the next day. A YES vote would be significantly more likely to lead to a quicker agreement with the creditors, but not without risks. Nevertheless, any agreement would likely require changes to re-build trust. Ultimately, the economic emergency will remain a key catalyst.