Greek PM Tsipras names anti-austerity cabinet

Updated: 2015-01-28 09:26


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Greek PM Tsipras names anti-austerity cabinet

Leader of the right-wing Independent Greeks party and junior partner of the government, Panos Kammenos (C), arrives for a swearing in ceremony at the presidential palace in Athens, January 27, 2015. [Photo/Agencies]


The first meeting of the new cabinet is expected at 10.30 a.m. (0830 GMT) but already the scale of the challenges it faces were starting to become apparent.

On the financial markets, yields on Greek three-year bonds jumped above 14 percent. This was up four percentage points since Sunday's vote although down from 16 percent at the beginning of the year, before the European Central Bank announced plans to stimulate the euro zone economy by buying debt issued by the bloc's governments.

A dive in banking stocks pushed the Athens bourse down by 3.69 percent. Investors are worried about Greek banks' liquidity and whether they will have continued access to ECB funding, with an extension to the country's bailout deal with the euro zone due to expire at the end of this month.

A German central banker warned of dire problems should the new government call the country's aid programme into question, jeopardising funding for the banks. "That would have fatal consequences for Greece's financial system. Greek banks would then lose their access to central bank money," Bundesbank board member Joachim Nagel told Handelsblatt newspaper.

Moody's credit rating agency said uncertainty created by the Syriza victory is negative for Greece's credit rating, adding that it "undermines depositor confidence and has an adverse effect on economic growth prospects".

The government's plan to negotiate a new debt deal has already run into resistance from its euro zone peers, which fear allowing Athens to write off some of its obligations would encourage other troubled countries to seek similar relief.