Banks Face Pressure on Eve of Meeting on Debt Crisis

New York Times
October 26, 2011

European officials scrambled on Tuesday for a way to entice banks to accept much deeper losses on their Greek bonds as debt crisis talks went down to the wire before a crucial gathering of European leaders on Wednesday.

With less than 24 hours before the meeting of government leaders in Brussels, banking representatives and European officials were negotiating over what losses banks should accept.

The banks have taken a hard line and warned that the write-off of debts they are being asked to agree to — about 55 percent — could result in a default or similar shock to the financial system, something European officials are desperate to avert. That has prompted a search for so-called complementary measures that might help to sweeten the deal for the bankers.

Stock markets in Europe and the United States fell as investors feared that the meeting would not deliver a plan ambitious enough to solve Europe’s financial crisis.

More