June 11, 2011
Germany's bank association on Saturday backed government proposals to get private creditors involved in the cost of a second bailout for Greece, although it was not clear if the banks favoured a controversial bond swap.
Berlin is pushing hard for commercial banks to contribute to the cost of the estimated 120 billion euro ($172 billion) deal, but has not yet convinced the European Central Bank and ratings agencies that this can be done without triggering a credit default.
Officials say the ECB argues that a swap, favored by German Finance Minister Wolfgang Schaeuble, could be judged a default and make Greek bonds unacceptable as collateral, potentially leading to a collapse of the Greek banking sector.
German Private Banking Association (BdB) Managing Director Michael Kemmer told a radio interviewer: "What Herr Schaeuble has proposed is in principle not unreasonable. Our members would also participate."
It was not clear if that meant he supported a swap or merely the idea of private creditors becoming involved.
But his comments also followed signs that French banks were agreed in principle to some form of rollover of Greek debt on condition that all creditors do the same.
Schaeuble urged parliament on Friday to back additional aid for Greece but said the banks' participation in a new package was "unavoidable" and that he favored a swap that would push out Greek debt maturities by seven years.
The head of the Eurogroup of euro zone finance ministers, Jean-Claude Juncker, aligned himself with Berlin, but said any solution must be agreed with the ECB.
"I am of the opinion that there will have to be a contribution from private creditors. There must be a voluntary, soft restructuring," he told Germany's Inforadio.
"We cannot push this private creditor participation through without the European Central Bank, or against it."
Asked how such participation could be arranged and kept voluntary, he said: "We are discussing it."
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