June 23, 2011
Seeking to head off a potentially destabilizing Greek default, European governments began the delicate task of convincing their major banks to voluntarily accept losses on their holdings of Greek debt.
In both Germany and France, finance-ministry officials met with representatives of their respective countries' leading banks and insurers on Wednesday to discuss how banks would shoulder some of the cost of a second bailout of Greece, people familiar with the matter said.
The trick will be for the private sector to take losses on Greek bonds, without Greece being declared in default. If the banks are forced to accept the losses, ratings companies likely will declare a default. Even if the banks act voluntarily, Greece could still be considered in default on its debts.
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