Banks called on to help with aid

Sev­eral EU na­tions in­vite fi­nan­cial groups to pitch in with Greece pack­age be­ing put to­gether

Kathimerini English - - BUSINESS & FINANCE -

Ger­many, France and the Nether­lands have launched talks with the pri­vate sec­tor on en­cour­ag­ing fi­nan­cial in­sti­tu­tions to par­tic­i­pate on a vol­un­tary ba­sis in a sec­ond Greece bailout.

“One is try­ing at the na­tional and in­ter­na­tional lev­els to get into talks with the pri­vate sec­tor in or­der to make the vol­un­tary con­tri­bu­tion by the pri­vate sec­tor quan­tifi­able,” Ger­man Fi­nance Min­istry spokesman Martin Kot­thaus told re­porters in Ber­lin. “The tar­get date is July 3.”

Asked if some form of com­pul­sion was be­ing held out as en­cour­age­ment, Kot­thaus said that the sta­bil­ity of Greece and the euro re­gion should be “enough” of an in­cen­tive for the pri­vate sec­tor to par­tic­i­pate.

Ac­cord­ing to sources cited by Reuters yes­ter­day, the Dutch Min­istry of Fi­nance was also in talks with the coun­try’s banks, in­sur­ers and pen­sion funds about the ex­ten­sion of debt to Greece.

Sep­a­rately, the French in­sur­ers’ as­so­ci­a­tion FFSA said its head, Bernard Spitz, had been sum­moned to the Fi­nance Min­istry in Paris yes­ter­day to dis­cuss the Greek debt sit­u­a­tion.

Eu­ro­zone gov­ern­ments are dis­cussing a sec­ond bailout pack­age for Greece that would run from 2011 to 2014 and could amount to 120 bil­lion eu­ros, in­clud­ing up to 30 bil­lion eu­ros from the pri­vate sec­tor.

But there is ris­ing pres­sure in coun­tries like Ger­many, Fin­land and the Nether­lands for ag­gres­sive steps to force banks to share the bur­den of a new aid pack­age, af­ter tax­pay­ers coughed up all of the money in the pre­vi­ous round.

Any sug­ges­tion that gov­ern­ments are forc­ing the banks to pay could be viewed by credit rat­ing agen­cies as ef­fec­tively a Greek de­fault or re­struc­tur­ing, how­ever. That could trig­ger fur­ther cat­a­strophic debt down­grades.

Ger­man Chan­cel­lor An­gela Merkel last week soft­ened her tough po­si­tion on the banks in a meet­ing with French Pres­i­dent Ni­co­las Sarkozy, and the two agreed that any pri­vate sec­tor sup­port should be purely vol­un­tary.

Yes­ter­day, Merkel said a bond­holder con­tri­bu­tion to a sec­ond aid pack­age for Greece was “al­ways meant to be vol­un­tary,” and that even that step was too much for many euro-area gov­ern­ments.

En­cour­ag­ing pri­vate in­vestors to par­tic­i­pate in a debt rollover only ever had mi­nor­ity sup­port among euro-re­gion coun­tries, Merkel said in ev­i­dence to a pub­lic hear­ing of the par­lia­ment’s Euro­pean Af­fairs Com­mit­tee in Ber­lin yes­ter­day.

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