The Greek debt crisis is once again taking center stage.  Greece fended off German and Dutch calls for an overseer to take command of its budget after its deficits surpassed targets in each of the last two years. Due to “national dignity,” Greek Finance Minister Evengelos Venizelos rejected the idea of handing over control.  Concerns over Greece’s ability to deliver budget cuts and economic reforms are holding up other parts of the nation’s next aid package, which it needs to meet a 14.5 billion-euro bond payment due on March 20.

As a result of the ongoing debt concerns, European banks declined across the board on Monday.  Shares of UBS AG (NYSE:UBS), Credit Suisse Group (NYSE:CS) and Banco Santander SA (NYSE:STD) all declined by about 3 percent.  Meanwhile, shares of Barclays PLC (NYSE:BCS) fell almost 5 percent.  Richard Batty from Standard Life Investments explains, “It’s one of those days when investors worry again about whether Greece can be solved and private investors will take the appropriate haircut.  We’re pretty cautious on equities.”  The bank sector was the worst performer in the euro zone.

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In a Federal Reserve survey of senior loan officers released on Monday, more than two-thirds of banks said they had reduced credit to European financial firms in January.  Reuters also explains that U.S. banks are “snapping up business from their beleaguered European competitors, countering the notion that new regulations are hurting Wall Street’s competitiveness.”  Big banks such as Citigroup Inc. (NYSE:C) and Morgan Stanley (NYSE:MS) both fell nearly 2 percent on Monday.  Bank of America (NYSE:BAC) fell 3 percent as Goldman Sachs (NYSE:GS) downgraded shares from Buy to Neutral.  Goldman Sachs also removed J.P. Morgan (NYSE:JPM) from its conviction list, but maintained its Buy rating on shares.

Germany is becoming increasingly less patient.  Patience with Greece “is really coming close to the limit,” Philipp Roesler, chief of Germany’s Free Democratic Party, the junior coalition partner, told Bild newspaper. “Time is running out. There can only be additional help if the Greek government carries out the necessary reforms.”  Furthermore, Klaus-Peter Mueller, CEO of Germany’s Commerzbank, is calling for Greece to exit the euro zone.

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