Thursday 26 April 2018

EU banks close to Greece rescue deal

Athens, June 25, 2011

Banks and policymakers moved closer to a deal to help Athens secure funds ahead of a parliamentary vote on austerity next week that Greek Prime Minister George Papandreou must win to avert default.

Despite a refusal by the conservative opposition to back the plan agreed with international lenders and signs of revolt in his own socialist party, Papandreou said he was confident the deeply unpopular package of spending cuts, tax increases and privatisations would pass.

'It is a moment of historic importance. If everybody resists, worse things will come, perhaps even bankruptcy,' Papandreou said on the sidelines of a summit of European Union leaders in Brussels.

The meeting saw euro zone governments discuss a new bailout package for Greece, which could include up to 30 billion euros ($42.6 billion) from the private sector to help cut Greece's huge public debt.

President Nicolas Sarkozy said French banks had agreed to participate in a voluntary rollover of Greek debt, Spain's Jose Luis Rodriguez Zapatero said Spanish banks were willing to take part in a scheme to buy Athens more time while Berlin has asked German banks to state their intentions next week.

'We have had many meetings with the banks and insurance companies. There is no difficulty,' Sarkozy said.

However, no new money will flow unless the Greek government enacts deep cuts.

After a difficult series of meetings this week, new Greek Finance Minister Evangelos Venizelos thrashed out an agreement with inspectors from the EU and the International Monetary Fund on Thursday to release the funds Greece needs immediately.

But if the vote next week is lost, international lenders are unlikely to release a 12bn euros funding tranche.

Sources said European banks and finance officials were discussing a proposal to replace existing Greek debt with a different type of bond to get around ratings agencies' reservations.

The proposal is for a voluntary rollover of debt into securities of a different and not comparable credit composition to avoid agencies moving Greece to default status.


Tags: EU | Greece | European banks | rescue deal |


calendarCalendar of Events