European banks may take €50-75 billion hit on Greek sovereign debt: Deutsche Bank

According to Deutsche Bank, European banks could face losses of between €50 billion ($63.5 billion) and €75 billion if Greece's debt crisis continued to worsen and banks were forced to take a "haircut" on Greek sovereign debt.

Germany's flagship lender has limited primary exposure to Greece, but faces "potential risk of tertiary market impact due to contagion," thanks to exposure to other vulnerable countries such as Spain, and Italy, Deutsche Bank said at a presentation on Tuesday.

Though Deutsche Bank has said it has "negligible" exposure to Greek debt, in the event of widening of debt on credit default swaps linked to Greek debt, it could lead to losses on illiquid positions held by Deutsche Bank, according to the bank's presentation made by deputy chief risk officer Stuart Lewis.

First off, holders of Greek sovereign debt may be forced to take a "haircut" on the debt, possibly resulting in losses of between €50 billion to €75 billion for European banks the presentation says.

Further there could be a "tertiary" market impact, with the crisis setting off a severed contagion globally starting with a spillover into weak European Union and some central and east European banks.

Earlier this year Greece had been downgraded by rating agencies Fitch and Standard & Poors' to BBB+, pointing to a higher probability of potential sovereign default, sending ripples across global markets.