LONDON Nov 10 German travel group TUI AG is going where the world's biggest financial firms have yet to venture.
It has decided to protect itself from the risk that Greece could leave the euro zone by asking Greek hoteliers to sign new contracts which would apply if this were to happen.
While other companies have thought about how to deal with the ramifications of what, until recently, was dismissed as a virtual impossibility by politicians and European Union bureaucrats, few have taken steps to protect themselves.
Even now, after Germany and France have raised the possibility of a country leaving the euro, most European firms are unwilling to talk publicly about their strategy in the event of the exit of one country or a break-up.
"We have discussed it at board meetings. But each time we have reached the same point and had to stop. There's no mechanism for an exit," the head of one large pan-European construction company told Reuters.
Investment bankers say they have run their own models for what might happen if the euro zone disintegrated.
And a senior banker at one major U.S. firm said it had taken the decision to cut all its own euro positions down to a minimum to reduce the risks, highlighting derivative positions as potentially the most problematic in the event of a break-up of the single currency bloc.
"We've looked at it, but it's a mess," said another banking source.
Talk to European corporate treasurers and the concept of a euro zone break up is one that has crossed the radar of many, and one which they have considered.
The problem is that there is no law or precedent for how a country might leave the euro, and therefore no clarity of how it would pan out. This makes it well nigh impossible for firms to plan or protect themselves against the risk.
COPING WITH THE UNKNOWN
For many companies, the urgency with which they are trying to find protection is tempered by the knowledge that their exposure to Greek markets is relatively small.
"When you are focused on China, Greece does not seem so important as a market," said the corporate treasurer of a large listed European manufacturer based in the euro zone.
Another corporate treasurer, whose firm sells manufactured goods to Greek clients, said the important point for his company was that it did not have any physical presence in Greece.
Any Greek exit from the euro would therefore not imply a write down of assets in a new devalued national currency.
A European luxury goods firm which exports to Greece and other Southern European countries has also considered the risk of a euro zone break up but opted not to panic.
"As far as invoices are concerned, those would stay in euros for as long as possible," the corporate treasurer of the luxury goods firm said, adding that the firm would expect Greek clients to absorb the higher price tags in local terms that any devaluation of a national currency would imply.
TUI clearly thinks differently and has told Greek hoteliers it would pay them in "the new currency" if the euro ceases to be used by Greece -- a move which would be beneficial to TUI since any such currency is expected to depreciate against the euro.
Uncertainty surrounding the single European currency has meant that corporates have become far more wary about where they put their cash and with whom they deposit it.
"We have around 2 billion euros in cash and are holding it in various currencies, spread between six different banks," the boss of the pan-European construction company said.
Uncertainty has forced bankers, lawyers and accountants to pick over the fine print of existing documentation for bond contracts, currency swaps and other financial transactions in case the unthinkable were to happen.
Bank research on the possibility of a euro break-up has proliferated in recent months, often in response to demand from those wanting to "stay ahead of the curve" and get views on what might happen next.
Questions posed by clients to investment bank Credit Suisse included what might trigger a break up of the euro zone, whether Germany can leave the euro zone, how costly a full-scale break up of the euro zone might be, and what the impact on U.S. and European equities would be under such a scenario.
Paul Robinson, global head of FX strategy at Barclays Capital, said client questions on the subject ranged from the specific, such as how euro-denominated contracts would be treated in the event of a break up of the euro zone, to the general, such as how financial markets might react.
"We have had a lot of questions (about the possibility of the break up of the euro zone) from institutional investors and corporates," Robinson said.
And if the euro were to break up?
"What happens would depend on how it breaks up. If it completely disintegrates and you get the return of all the national currencies, it is one thing. But if the euro remains the euro and it is just Greece leaving, or something like that, then you still have a euro asset or liability that has the same legal status," Robinson said.
GHOSTS IN THE MACHINERY
Some investors are working through the scenarios and adjusting their portfolios accordingly.
"If you continue to hold bank or government debt in euros and it blows up, you are not sure in fact of the currency in which your asset is issued," said a U.S. banker.
"The euro is what these bonds are denominated in and the question is what happens to these bonds."
That is the question which is providing plenty of billed hours for advisers.
"There is a lot of interest in the euro and in a possible break up. Everybody wants to understand what their position would be if the worst happened," a senior legal adviser at a leading UK-based law firm said.
"Banks and governments in Europe and abroad are asking us what they should do with their documents if the law changed...if you are a Greek bondholder, could the bond be converted into drachma," the legal adviser added.
Some 95 percent of Greek debt securities are governed by Greek law and their value would automatically be converted into a new currency if Greece left the single currency, the adviser said. If they are governed by UK law this would not be the case.
In the past decade, the common currency has swept away centuries of monetary history and many have long forgotten what Greek drachmas, French francs, Spanish pesetas and Irish pounds looked like.
But in some places, the ghost of currencies past is trapped in the machinery of electronic payments.
A recent credit card transaction in Paris listed the price in euros, and beneath it what it would have cost in francs.