Greek Bank bonds fall on bail-in talks

The Pak Banker - - COMPANIES/BOSS -

Se­nior bonds of Greek banks tum­bled af­ter Euro-area fi­nance min­is­ters pro­tected de­pos­i­tors from any losses in the na­tion's 86 bil­lion-euro ($96 bil­lion) bailout. Eurogroup Pres­i­dent and Dutch Fi­nance Min­is­ter Jeroen Di­js­sel­bloem said de­pos­i­tors will be shielded from any losses re­sult­ing from the restruc­tur­ing of the na­tion's fi­nan­cial sys­tem. The de­ci­sion puts se­nior bank bond­hold­ers in line for losses if Greek lenders tap into any of the fi­nan­cial sta­bil­ity funds set aside in the new bailout.

"The bail-in in­stru­ment will ap­ply for se­nior bond­hold­ers, whereas the bail-in of de­pos­i­tors is ex­plic­itly ex­cluded," Di­js­sel­bloem said. His com­ments re­late to Euro­pean Union rules to make pri­vate in­vestors share the cost of fix­ing trou­bled banks. Eurobank Er­gasias SA's se­nior un­se­cured 4.25 per­cent June 2018 bonds dropped 33 per­cent to 37 cents on the euro at 11:30 a.m. in Lon­don. Pi­raeus Bank SA's se­nior un­se­cured 5 per­cent March 2017 bonds plunged 27 per­cent to 38 cents, while Al­pha Bank AE's se­nior un­se­cured 3.375 per­cent notes due June 2017 dropped 15 per­cent to 58 cents, ac­cord­ing to data.

Greece's euro-area cred­i­tors made adop­tion of the Euro­pean Union's Bank Res­o­lu­tion and Re­cov­ery Di­rec­tive, or BRRD, a pre­con­di­tion of the bailout. The di­rec­tive, which makes it eas­ier to im­pose losses on se­nior cred­i­tors, should rank se­nior un­se­cured bond­hold­ers and de­pos­i­tors equally, said Olly Bur­rows, UK-based fi­nan­cials an­a­lyst at bro­ker­age firm CRT Cap­i­tal.

Newspapers in English

Newspapers from Pakistan

© PressReader. All rights reserved.