Citi says Greek debt may be contagious

Greece's debt crisis may be contagious and poses one of the biggest risks to global financial markets alongside Middle East uprisings, Citigroup's Chief Risk Officer told Reuters.

Greece, on the verge of a debt default following Portuguese and Irish bailouts, is being pressured by European finance ministers to introduce harsh austerity measures before they agree to 12 billion euros (USD 17 billion) in emergency loans.

"In Europe, you have to think about whether there will be contagion beyond (Greece)," Brian Leach, told Reuters Insider Television in an interview on the sidelines of the International Economic Forum in St Petersburg.

"I think it will be tough to constrain (the debt crisis) to Greece, (but) other countries have made remarkable progress," he added.

Another significant market risk comes from the Middle East and North Africa (MENA), Leach said.

"The regime changes that are taking place (in MENA) are quite significant. Depending on where those regime changes take place you could imagine a very different world," he said.

Socio-political unrest, which spread across some Middle East and North African countries this year, has pushed up global commodity prices, with crude prices rising more than 22% since January.

Leach sees no further threat from the issues that caused the 2008-09 financial crisis, but instead sees new problems emerging.

"There will always be a new problem on the horizon... So as we all are trying to address whether this is MENA, whether it is the sovereign debt crisis in Europe, whether it is the domestic US debt crisis (...), each of us has to adjust our books to adjust to the new horizons. I think the old ones have been addressed," he said.

Citi's lending strategy was revised a couple years ago to adjust to changing markets and tougher regulation.

Despite all these risks, Citi continues to lend and will not compromise its lending standards, Leach said.