–Talks To Focus On E100 Bln Bank Recapitalization; Bigger Greek Haircut
By Angelika Papamiltiadou
BRUSSELS (MNI) – Eurozone finance ministers will return to the
negotiating table Saturday afternoon in an emergency meeting for further
talks on a plan to recapitalize European banks and increase the haircut
on privately-held Greek sovereign debt, a senior EU official told Market
News International.
Earlier today, the 27 European Union ministers decided in principle
on a framework for bank recapitalization of up to E100 billion by the
end of June 2012, the same official said.
The Eurogroup’s extraordinary meeting, the second of the weekend,
will also deal with proposals aimed at putting a bigger share of the
burden for a new Greece bailout plan on Athens’ private sector
creditors.
A plan for private sector involvement (PSI) agreed in July would
have included a 21% haircut on the value of Greek sovereign bonds held
by private financial institutions. But since then, there has been
widespread acknowledgement, pushed by Germany, that the private sector
hit needs to be bigger.
“There are two scenarios currently on the table,” the EU official
said. “One is a ‘PSI-Plus’ agreement that could double the initial
proposal and extend a haircut to 42%, and another, a more drastic
solution, for a haircut of 50%-60%.”
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–Athens bureau, a_papamiltiadou@hotmail.com
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