● BAILOUT FUND
Leaders have thrashed out a rough agreement to leverage the fund to increase its size from €440bn to around €1 trillion. This deal will satisfy German leader Angela Merkel, who lobbied for leveraging, but is smaller than hoped for by many in the markets.
● GREEK DEBT HAIRCUTS
While no firm agreement has been reached on the scale of haircuts to be forced upon Greek bondholders, the numbers being thrown around suggest the figures will be vast. The IMF was said to favour haircuts of as much as 75 per cent, though a 50 per cent figure has also been widely mentioned. Talks between leaders and private lenders were still underway in the early hours of this morning.
● BANK CAPITALISATION
One of the few details in the leaders’ three-page communique last night was this: “There is broad agreement on requiring a significantly higher capital ratio of nine per cent of the highest quality capital and after accounting for market valuation of sovereign debt exposures, both as of 30 September 2011.” The EBA estimates that European banks need to raise €106bn.
Vague at best. Leaders hope to pin down the remaining details next month. Banks have until June 2012 to meet the new capital requirements.