French banks outline Greek rescue plan
FRENCH ministers and banks have agreed to roll over maturing Greek sovereign bonds, in the first indication that private investors will play an active role in resolving the Mediterranean nation’s debt problems.
The French treasury and the banks will put forward the agreement today at a meeting of Eurozone ministers and financial institutions in Rome later today.
The plans will outline a resolution to the Greek debt crisis that is more palatable to creditors than at present, under which investors in the nation’s debt stand to lose significant sums.
Under the French proposals, creditors would reinvest just 70 per cent of the proceeds reimbursed when Greek debt falls due, with 50 per cent going into new Greek debt with a maturity of 30 years instead of five.
The other 20 per cent would be reinvested in a “zero coupon” fund focused on high-quality stocks that would grow, providing a degree of security in place of state guarantees.
The proposals could be changed as discussions develop.
German banks, which say they have up to €20bn (£17.7bn) of exposure to Greece, have called for the state to guarantee their risk with taxpayer money should they participate in some form of a debt rollover.
The Greek government will try to push through a deeply unpopular set of austerity measures this week to enable it to receive the next €12bn tranche of bailout loans it needs to avoid defaulting on debt that matures in mid-July.
The country’s parliament is due to vote on Wednesday and Thursday on measures that include €6.5bn of extra austerity steps for this year and savings of €22bn for 2012-2015 to cut deficits and keep qualifying for aid from the European Union and the International Monetary Fund.
Eurozone finance ministers have said they will define by early July “the main parameters” of a new bailout plan.