France, banks agree Greek debt proposed: source

PARIS. Sun June 26, 2011 5 pm EDT

PARIS (AFP) - the French Government and the banks have agreed to a proposal to a reversal of the Greek debt more acceptable to creditors, a banking source, said Sunday, confirming a report in the daily Le Figaro.

Under the plan, creditors would reinvest 70 percent of the refunded products when Greek debt will be due, with 50% enter links Greek new with a duration of 30 years instead of five years, the newspaper said on its Web site.

These bonds would pay a base rate of interest similar to what the Greece is paid on the loans of the European Union and the IMF, with a view to win an additional bonus if Greek economy grows strongly investors.

The 20 percent could be reinvested in a zero coupon funds "securities of high quality," which would accumulate interest to be paid at maturity, said Le Figaro.

"It's a French Banking Federation solution," the source said, confirming that the report in Le Figaro was "close to reality."

The French Finance Ministry was not available for comment. The French Banking Federation refused to comment on.

German banks, which say that they have up to 20 billion euros ($28.3 billion) of exposure to the Greece, called for the State to guarantee their risk with taxpayer money should they participate in a form any debt overturned.

The Greek Government will attempt to pass a very unpopular set of austerity measures this week so that it can receive the next tranche of 12 billion dollars-euro rescue loan to avoid default on the debt which matures in July.

The Greece agreed a package of 110 billion euros of loans from the EU and the IMF in May 2010 but must now a second plan rescue of a size similar to meet its obligations until 2014, when it wants to return to the capital for the financing markets.

Finance Ministers the euro area said that they will define in early July, "main settings" of a new international bailout plan.

German Finance Minister Wolfgang Sch?uble, told Bild am Sonntag he expected from private creditors participate voluntarily in a second rescue plan, also points out that the Greece would not receive the next tranche of aid if the Government austerity plans were vetoed.

The Greek Parliament is due to vote Wednesday and Thursday on measures which include 6.5 billion euros this year additional austerity measures and savings of EUR 22 billion for 2012-2015 reduce deficits and keep qualifying with the EU and the IMF.

Deputy Prime Minister the Greece, said Sunday that rebel lawmakers can block certain reforms sought by the international donors, although Parliament would probably return an overall package of austerity.

(Reports by James Regan;) (Editing by Daniel Flynn and Peter Graff)