BERLIN--the largest banks in the euro area will be fighting Wednesday on how much they are willing to contribute to a new package of support for the Greece in debt.
At a meeting in Paris, senior European lenders will attempt to find the terms and conditions by virtue of which they would be willing to buy Greek new obligations, currently considered one of the more risky investments in the world.
The banks are in a delicate position: on the one hand, they must convince countries such as the Germany and the Netherlands, who want to keep the amount of money that they pay as low as possible to the Greece. On the other hand, they want to avoid losses which could impair their results and may cause trouble with the shareholders.
The Governments of the euro area have said that the contributions of the sector private in a new bailout package for the Greece - probably a euro115 extra billion in mid-2014 on the top of European already granted billion a year ago - was to be "serious", but should not be considered a default.
Both goals have proved to be difficult. German banks, said last week that that they would be willing to participate in a reversal of so-called liaison, but their contribution would represent only some certificate billion, given that most of their assets expires after 2014.
At the same time, rating agencies, which became umpires in this exercise, have already indicated that even a relatively mild reversal, as recently proposed by the French Banking Federation, would move Greece in a rating of "selective default" at least for a while and could force banks to Records loss on the affected obligations.
Banks cannot agree on the final terms of rollover at their meeting on Wednesday, under the auspices of the Institute of Finance of the International. "The meeting tomorrow... is part of a series of meetings of the main private creditors in Greece to support the reform program," said Frank Vogl, a spokesman of the IIR, adding that similar gatherings are planned in the coming weeks.
In accordance with the proposal of the France, which has gained traction with Germans, banks lenders would reinvest 50% of their assets in obligations of new Greek with a maturity up to 30 years in exchange for heavy interest rates and be provided by a separate Security Fund.
Already, eurozone governments are more comfortable with power that they have given to the rating agencies. German Chancellor Angela Merkel said Tuesday that the three institutions that oversee the bailout Greek - European Central Bank, International Monetary Fund and the European Commission - should make their own assessment of the roll-over, regardless of what the rating agencies.
"I hope especially the case of these three institutions," said Angela Merkel.
His comments came after that Standard & Poor, said the current French proposal for banks to refinance their Greek debt holdings "constitute probably a default value," while fellow rating agency Moody said banks are record impairment losses on the routes affected.
The ratings are important for the European Central Bank, which will not accept obligations as security that have been noted as "selective default" or worse by all the major agencies. That would have cut the Greek lenders in broad support of liquidity from the ECB and could trigger a major banking crisis in the country.
But the European Union and the ECB have warned that a negative note could cause also to investors of money from other States of the euro area vulnerable, such as the already made-out Portugal and Ireland and much more Spain and the Italy.
Another concern is the credit default swaps, insurance contracts that banks and other investment funds contracted with Greek bonds. If these contracts must be paid is not decided by the agencies rating, but a separate institution, the International Swaps and Derivatives Association, which is controlled by the major investment banks and funds of the world.
___
Steinhauser of Brussels.
No comments:
Post a Comment