Some banks may walk away from government debt primary market -BNP

LONDON, June 24 Tue Jun 24, 2014 9:51am EDT

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LONDON, June 24 (Reuters) - Euro zone sovereigns could face higher funding costs as banks which make markets in their debt start to pull out amid regulatory pressures, said Martin Egan, global head of primary markets and origination at BNP Paribas.

"Borrowers will be more challenged because they will have less liquidity and potentially higher funding costs," said Egan, appearing on a panel with a group of euro zone sovereign debt managers at Euromoney's Global Borrowers Forum in London.

"The fundamental economics of the business have become challenged. Longer term you will see fewer banks involved in euro zone government primary dealerships." (Reporting by John Geddie and Patrick Graham)

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