Brussels (MNI) – The bank recapitalization plan decided in
principle by European Union finance ministers Saturday requires banks to
raise their Tier 1 capital level to 9%, an EU official said.
Reaching that level will require European banks to raise about E100
billion in new capital, the source indicated.
Tier 1 capital is the most basic form of bank capital, consisting
mostly of equity and retained reserves.
Ministers have not come to an agreement yet on the level of
write-down that banks will be asked take on their Greek sovereign debt
holdings, the source said. But he indicated that they are working on a
model based on the Greek debt sustainability report issued to Eurozone
member states on Friday.
That report said that Greek debt can be brought to 120% of GDP by
2020 if a 50% haircut is applied, and 110% of GDP by 2020 if there is a
60% write-off.
The source said that negotiations with banks are ongoing and that
there was no indication when a deal might be reached.
–Paris newsroom, +331-42-71-55-40; jduffy@marketnews.com
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