A disorderly default in Greece would probably leave Italy and Spain needing outside help to stop risks spreading and cause more than €1 trillion damage to the eurozone, the Institute of International Finance (IIF) said.

"There are some very important and damaging ramifications that would result from a disorderly default on Greek government debt," the IIF said in a document obtained by Reuters.

"It is difficult to add all these contingent liabilities up with any degree of precision, although it is hard to see how they would not exceed €1 trillion."

The document, obtained from a market source, was dated February 18 and marked IIF Staff Note: Confidential.

The IIF wants bondholders to sign up by a Thursday (tomorrow) deadline for a bond swop deal aimed at saving Greece more than €100 billion and putting the country on a more stable footing.

If it fails to win support, the European Central Bank would likely suffer substantial losses, the document said, estimating the central bank's exposure to Greece of €177 billion was over 200% of its capital base.

Both Ireland and Portugal would need more outside help to insulate them from Greece, which could cost €380 billion over five years, the IIF estimated.

A disorderly Greek default would also probably require "substantial support to Spain and Italy to stem contagion there", which could cost another €350 billion, it said.

The IIF, which helped negotiate the bond swop deal on behalf of creditors, said there would be more massive bank recapitalisation costs, which could easily hit €160 billion. —Reuters