Portugal adds to woes as banks meet on Greece

Reuters
July 6, 2011

A credit rating downgrade for Portugal has added to fears Europe's banks face heavy losses on their euro zone lending if a private sector plan to help Greece comes unstuck, piling pressure on creditors meeting on Wednesday.

Banks are attempting to fine-tune a private sector creditors' deal for Greece that can get past credit rating agencies without it being termed a default.

Industry lobby group The Institute of International Finance (IIF) chaired the meeting of banks and other private-sector creditors in Paris on Wednesday, held at the headquarters of BNP Paribas, France's biggest bank and one of the biggest holders of Greek debt.

BNP's chairman said the banks needed to find a solution to the Greek debt crisis that would not cause ratings agencies to declare a default.

The initial meeting ended around lunchtime but more meetings will be held to "move ahead" with the private sector's aim of participating in Greece's rescue, a spokesman for the IIF said.

"We need to find a solution that avoids a default since that's the decision of the authorities," Michel Pebereau told BFM Radio in an interview.

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