Banks meet to thrash group plan to help Greece

Men fit a national flag and a European flag at the front of the Greek Parliament in Athens, June 7, 2011.

Credit: Reuters/Yiorgos KarahalisBy Paul Taylor and Alex Chambers

LONDON AND PARIS. Tue July 5, 2011 2: 00 am EDT

London/PARIS (Reuters) - international banks and insurers will meet on Wednesday to thrash group a plan for the private sector to contribute to the rescue effort of the fears Greece growth that the proposal will be déraillée.

The pressure group Institute of Finance International (IIR) said that he would chair the meeting of the private creditors.

It must address how a deal can cross without rating agencies being called a failure, and how accountants will deal with it.

Much work remains to be done and the meeting on Wednesday will be not decisive, said several sources.

"It is a process." New French Finance Minister, said today that it will take weeks, in the summer. It is complex. It cannot be established overnight, "said a source in French private sector involved in the negotiations.

He said there is probably not a single "size unique solution", but rather of several options, given the number of different bond and involved stakeholders.

"The issue is so complex that it takes longer," said a German banking source in the industry.

French banks, the main Greek sovereign debt holders, have proposed to the Greek obligations voluntarily renewing when their maturity. Holders would reinvest at least 70% of the proceeds of bonds coming due by the end of 2014 in the new Greek debt for 30 years.

The Financial Times said a new proposal, sweet to be more attractive to the Greece, which will be presented at Wednesday meeting, lowering the interest rate and increase the proportion of debt targeted for a barrel in the French plan.

The interest rate would come in as few as 5.76% rather than the range of 5 5-8, 0% originally proposed, the FT.com report said.

Politicians and bankers expressed confidence last week that the French proposal would not a default value, but credit rating agency Standard & Poor Monday said that it would mean losses to debt holders, probable win the Greece a "selective default" rating.

The S & P statement was taken by decision makers in the EU as "a message to rework the plan does not to this divide", said an EU source.

"The French plan will not abandoned for political obvious reasons, because the Member States want to have something to give to their national parliaments," said the source.

The IIR, said Friday that banks supported the proposals by Greece and were considering a few options. Creditors are now trying to hammer of details.

A meeting on certain banks took place in Paris on Tuesday for an informal discussion to solve problems, those familiar with the matter said.

There is also concern that the private sector can correspond not target to raise 30 billion euros ($42.6 billion) of the plan if the contribution of the Germany of the private sector EUR 2 billion is a gauge.

That made it essential to involve the pension funds, hedge funds and insurers and banks, the French source said.

There are 82.6 billion euros of Government Greek bonds coming due before the end of 2014, according to Reuters data.

The European Central Bank and the other eurozone central banks hold an approximately 25 billion euros in debt, leaving approximately 58 billion in private hands. But not all creditors will participate.

New Finance Minister François Baroin the France, said that Thursday to discuss the second Greek rescue with his German counterpart Wolfgang Sch?uble, he would go to Berlin.

"The target date is late summer (OK), during the month of September," Baroin said.

Obtaining clarity on the accounting treatment of the plan of the France remains a key issue for the amount of movement, said sources.

Go too far from the market prices could lead to a violation on a broad portfolio, but too small a move would make it too expensive for the Greece.

The IIF, representing insurers and other financial institutions and banks, including BNP Paribas, Deutsche Bank, HSBC and Societe Generale, plays an international coordinating banks informal role to reach a consensus on the participation of the sector bailout of the Greece private debt.

The Wednesday meeting will be chaired by Charles Dallara, Executive Director of IIF. It is one of a series of meetings that the IIR is co-ordinating, works in tandem with technical discussions since an IIR meeting in Rome a week ago.

(Reporting by Alex Chambers, IFR markets, in London.) Paul Taylor in Paris. Other reports by Steve Slater in London, Julien Toyer in Brussels, Philipp Halstrick in Frankfurt and Jean-Baptiste Vey in Paris. (Editing by Hans-Juergen Peters and David Hulmes)