BRUSSELS (Reuters) – Euro zone finance ministers and representatives of the private sector finalized a deal on Tuesday that will provide 130 billion euros of new financing to Greece and help to cut Athens‘ debt-to-GDP ratio to just over 120 percent by 2020.
The deal relies on private sector holders of Greek government bonds accepting a greater than 53 percent loss on the nominal value of their holdings, which will help reduce Greece’s debt by around 100 billion euros.
Following are comments by ministers and officials after the talks, which lasted more than 13 hours.
IMF MANAGING DIRECTOR CHRISTINE LAGARDE
“I will take this matter further to the board of the IMF in the second week of March, obviously subject to prior action that Greece has committed to deliver before the end of February being actually delivered.”
EU COMMISSIONER FOR ECONOMIC AND MONETARY AFFAIRS OLLI REHN ON COMBINING EFSF AND ESM POWER
“It should be possible to combine the firepower of the ESM and the remaining amount of the EFSF in order to have a substantially stronger financial firewall than we have at the moment. If you calculate you can see the ESM is 500 billion euro and the EFSF remainder is 250 billion euro, that is a good starting point to reinforce the IMF resources.
“I expect that we can reach our decision in March so that we can come to a conclusion on the reinforcement of the IMF resources in the course of this spring.”
EUROGROUP PRESIDENT JEAN-CLAUDE JUNCKER
“After a meeting of at least 13 hours, we have reached a far reaching agreement on Greece’s new program and private sector involvement that would lead to a significant debt reduction for Greece and pave the way towards an unprecedented amount of new official financing being provided by the EFSF to secure Greece’s future in the euro area.
“The debt to GDP ratio is expected to reach 120.5 percent by 2020 and program financing is estimated to amount to 130 billion until 2014.
“Greece will launch bond exchange offer in coming days.
“Given the balanced agreement reached with the creditor group led by the IIF and the fact that the package delivers debt sustainability for Greece we expect a high participation rate.”
ON PRIVATE SECTOR ROLE
“In order to show our good faith to the private sector the official sector will be making an important contribution.
“Creditors will implement a further lowering of lending margins of bilateral loans to Greece to 150 bps over the entire period of loans compared to the current margin of 200 bps over the first three years and 300 bps thereafter.
“This will bring the debt-to-GDP ratio down by 2.8 percent by 2020.
ON NATIONAL CENTRAL BANKS’ ROLE
“Governments of member states where central banks currently hold Greek bonds in their investment portfolios will commit to pass on to Greece an amount equal to any future income.
“This will lower financing needs by 1.8 billion euros.”
ON MONITORING OF ATHENS
“The Commission will reinforce the task force for Greece.
“The troika will also substantially reinforce its presence in Athens in order to counteract any slippage in Athens.
“In the meantime a mechanism will be put in place to better trace and monitor funds put in place to service Greece’s debt,” he said, referring to the setting up of an escrow-style account.
GERMAN FINANCE MINISTER WOLFGANG SCHAEUBLE
“The new program for Greece will be 100 bln euros plus 30 bln for the swap deal as agreed. To reach this, given the fresh numbers since the decision of the summit, the private sector had to move a bit further in negotiations. We agreed a haircut of 53.5 percent and the coupon for the new bonds will start at about 2 percent, will rise with time from 3 to 4.3 percent after 2020. In this way we will reach the reduction in debt.
“It’s a result that can be justified and that creates the preconditions to get Greece onto a sustainable return to economic health if the swap deal with private creditors is successful. We didn’t make it easy on ourselves. We insisted that the parameters of debt sustainability of 120 pct of GDP will be maintained just like the 130 billion as an upper limit for the second Greek program.
“All of that now depends on the reaction from the private sector and besides, it’s all conditional on Greece fulfilling the prior actions. Greece has agreed a number of measures but there are others… that it has to get onto the way legally by the end of the month. We also agreed that we as the eurogroup will check this immediately at the start of March on the basis of the troika report.
“The Commission has said it will significantly strengthen the use of staff for the monitoring, advice and support of Greek authorities in implementing these measures and we as member states have also said we’ d provide staff if wanted and requested.
ON IMF
“The IMF has promised it will take part in the new program, but the decision is not a foregone conclusion on the IMF board, so it’s not helpful for us in the eurogroup to talk about it. Madame Lagarde will make the proposal to the IMF board and it will agree. We have voiced our expectations but we also know that we have to accept that each member in the IMF board has its own responsibility.”
(Reporting Claire Davenport and Annika Breidthardt)
http://tourism9.cm/ http://vkins.com/
2012年2月20日星期一
Decision day for second Greek bailout despite financing gaps
BRUSSELS (Reuters) – Euro zone finance ministers are expected to approve a second bailout for Greece on Monday to try to draw a line under months of uncertainty that has shaken the currency bloc, although there is work to be done to make the figures add up.
Diplomats and economists say they do not expect the package to resolve Greece’s economic problems. That could take a decade or more, a bleak prospect that brought thousands of Greeks onto the streets to protest austerity measures again on Sunday.
The ministers need to agree new measures to square the numbers, given the ever-worsening state of the Greek economy. But they say an agreement on Monday will help restructure the country’s vast debts, put it on a more stable financial footing and keep it inside the 17-country single currency zone.
Senior officials from euro zone finance ministries and the European Central Bank held a conference call on Sunday to go over the final details of the 130-billion-euro ($171-billion)program, including a debt sustainability analysis critical to the International Monetary Fund.
While there is skepticism in Germany and other countries that Greece will be able to live up to its commitments – including implementing 3.3 billion euros of spending cuts and tax increases – officials said momentum was building for approval of the deal.
French Finance Minister Francois Baroin said all the elements were in place to reach an agreement.
“It cannot wait any longer … Greece has debt payments in March and could find itself in bankruptcy, something which France has been trying to avoid for the last 18 months,” he told Europe 1 radio on Monday.
Finnish Finance Minister Jutta Urpilainen said Greece had done all that had been asked of it.
“There are many open details … A big issue is that we have to get Greece’s debt on a level that is sustainable and enables Greece to survive,” she told reporters in Helsinki.
A euro zone official in contact with junior ministers involved in the Sunday conference call said the financing gaps were not so large that they risked derailing the whole process.
“I don’t see anybody wanting to be responsible for pulling the plug on the deal at this late stage,” he said.
“The gut feeling is that this is going to go through – everyone feels the pressure this time to deliver,” he said, indicating that the Netherlands, Finland and Germany, which have been the most critical of Athens’ ability to commit, looked likely to come on board if the financing gaps could be closed.
GREEK ANGER UNABATED
Several thousand Greeks demonstrated on Sunday against the austerity measures to reduce the country’s debt, although the numbers were much lower than earlier protests.
Greek Prime Minister Lucas Papademos flew to Brussels for last-minute preparations as about 3,000 demonstrators massed on the capital’s central Syntagma square.
Riot police shielded the national assembly to prevent a repeat of riots a week ago when masked youths torched buildings and looted shops across Athens.
Under one crucial element of the deal, Greece will have around 100 billion euros of debt written off via a restructuring involving private-sector holders of Greek government bonds.
Banks and insurers will swap bonds they hold for longer-dated securities that pay a lower coupon, resulting in a real 70 percent reduction in the value of the assets.
The bond exchange is expected to launch on March 8 and complete three days later, Athens said on Saturday. That means a 14.5-billion-euro bond repayment due on March 20 would be restructured, allowing Greece to avoid default.
The vast majority of the funds in the 130-billion-euro program will be used to finance the bond swap and to ensure that Greece’s banking system remains stable: 30 billion euros will go to “sweeteners” to get the private sector to sign up to the swap, 23 billion will go to recapitalize Greek banks.
A further 35 billion will allow Greece to finance the buying back of the bonds, and 5.7 billion will go to paying off the interest accrued on the bonds being traded in.
The overall objective is to reduce Greece’s debts from 160 percent of GDP to around 120 percent by 2020 – the figure and timeframe that the IMF, ECB and the European Commission, together known as the troika, have established as sustainable.
MEETING THE TARGET
The focus of Monday’s finance ministers’ meeting will be what “around 120 percent” means in practice.
A debt sustainability report delivered to euro zone finance ministers last week showed that under the main scenario, Greek debt will only fall to 129 percent by 2020.
The IMF has said if the ratio cannot be cut to around 120 percent, it may not be able to help finance the Greek program.
U.S. Treasury Secretary Tim Geithner urged the International Monetary Fund to support the program.
“This is a very strong and very difficult package of reforms, deserving of support of the international community and the IMF,” Geithner said in a statement on Sunday.
As well as working to get the number down, there are moves to convince members of the troika that a debt level of 123-125 percent in 2020 would be sustainable.
“If we can get it down to 123 or 124 percent, I think everyone’s going to be okay with that,” the euro zone official said after the Sunday conference call. “Everyone will find a way to tweak the numbers.”
A number of measures, including restructuring the accrued interest portion or reducing the “sweeteners,” are being considered to move the figure closer to 120, a euro zone official familiar with the negotiations said.
There are also discussions about marginally lowering the interest rate on 110 billion euros of bilateral loans already made to Greece in May 2010 – the first package of support – to lighten the financing burden on Athens.
Central banks could help too.
The ECB is weighing up whether to allow Greek bonds held in euro zone central banks’ investment portfolios to be subject to the same writedowns private investors are set to take, central bank sources told Reuters on Friday.
The central banks hold around 20 billion euros of Greek bonds in their traditional investment portfolios and the ECB holds about double that amount from its emergency bond-buying program. It has also signaled it could forego the profits made on the latter at some point.
If the finance ministers do succeed in reaching an agreement, it will provide immediate relief to Athens and financial markets, which have been kept guessing since the bailout package was announced last October.
But no one is pretending it will end Greece’s problems. Figures last week showed its economy shrank 7 percent year-on-year in the last quarter of 2011, much more than expected, with further cuts likely to make matters worse.
The troika, responsible for monitoring Greece’s reform progress, carries out quarterly reviews, while the European Commission will soon have dozens more monitors on the ground.
Already there is concern that at any one of those reviews of the new program – if it is approved on Monday – Greece will be found to be behind, especially if GDP continues to slump.
That will again raise the threat the country will have to default if it cannot meet its obligations, and invite questions about its ability to remain in the euro zone.
($1 = 0.7597 euros)
(Additional reporting by Daniel Flynn in Paris, Terri Kinnunen in Helsinki and George Georgiopoulos in Athens; writing by Mike Peacock; editing by Elizabeth Piper)http://tourism9.com/ http://vkins.com/
Diplomats and economists say they do not expect the package to resolve Greece’s economic problems. That could take a decade or more, a bleak prospect that brought thousands of Greeks onto the streets to protest austerity measures again on Sunday.
The ministers need to agree new measures to square the numbers, given the ever-worsening state of the Greek economy. But they say an agreement on Monday will help restructure the country’s vast debts, put it on a more stable financial footing and keep it inside the 17-country single currency zone.
Senior officials from euro zone finance ministries and the European Central Bank held a conference call on Sunday to go over the final details of the 130-billion-euro ($171-billion)program, including a debt sustainability analysis critical to the International Monetary Fund.
While there is skepticism in Germany and other countries that Greece will be able to live up to its commitments – including implementing 3.3 billion euros of spending cuts and tax increases – officials said momentum was building for approval of the deal.
French Finance Minister Francois Baroin said all the elements were in place to reach an agreement.
“It cannot wait any longer … Greece has debt payments in March and could find itself in bankruptcy, something which France has been trying to avoid for the last 18 months,” he told Europe 1 radio on Monday.
Finnish Finance Minister Jutta Urpilainen said Greece had done all that had been asked of it.
“There are many open details … A big issue is that we have to get Greece’s debt on a level that is sustainable and enables Greece to survive,” she told reporters in Helsinki.
A euro zone official in contact with junior ministers involved in the Sunday conference call said the financing gaps were not so large that they risked derailing the whole process.
“I don’t see anybody wanting to be responsible for pulling the plug on the deal at this late stage,” he said.
“The gut feeling is that this is going to go through – everyone feels the pressure this time to deliver,” he said, indicating that the Netherlands, Finland and Germany, which have been the most critical of Athens’ ability to commit, looked likely to come on board if the financing gaps could be closed.
GREEK ANGER UNABATED
Several thousand Greeks demonstrated on Sunday against the austerity measures to reduce the country’s debt, although the numbers were much lower than earlier protests.
Greek Prime Minister Lucas Papademos flew to Brussels for last-minute preparations as about 3,000 demonstrators massed on the capital’s central Syntagma square.
Riot police shielded the national assembly to prevent a repeat of riots a week ago when masked youths torched buildings and looted shops across Athens.
Under one crucial element of the deal, Greece will have around 100 billion euros of debt written off via a restructuring involving private-sector holders of Greek government bonds.
Banks and insurers will swap bonds they hold for longer-dated securities that pay a lower coupon, resulting in a real 70 percent reduction in the value of the assets.
The bond exchange is expected to launch on March 8 and complete three days later, Athens said on Saturday. That means a 14.5-billion-euro bond repayment due on March 20 would be restructured, allowing Greece to avoid default.
The vast majority of the funds in the 130-billion-euro program will be used to finance the bond swap and to ensure that Greece’s banking system remains stable: 30 billion euros will go to “sweeteners” to get the private sector to sign up to the swap, 23 billion will go to recapitalize Greek banks.
A further 35 billion will allow Greece to finance the buying back of the bonds, and 5.7 billion will go to paying off the interest accrued on the bonds being traded in.
The overall objective is to reduce Greece’s debts from 160 percent of GDP to around 120 percent by 2020 – the figure and timeframe that the IMF, ECB and the European Commission, together known as the troika, have established as sustainable.
MEETING THE TARGET
The focus of Monday’s finance ministers’ meeting will be what “around 120 percent” means in practice.
A debt sustainability report delivered to euro zone finance ministers last week showed that under the main scenario, Greek debt will only fall to 129 percent by 2020.
The IMF has said if the ratio cannot be cut to around 120 percent, it may not be able to help finance the Greek program.
U.S. Treasury Secretary Tim Geithner urged the International Monetary Fund to support the program.
“This is a very strong and very difficult package of reforms, deserving of support of the international community and the IMF,” Geithner said in a statement on Sunday.
As well as working to get the number down, there are moves to convince members of the troika that a debt level of 123-125 percent in 2020 would be sustainable.
“If we can get it down to 123 or 124 percent, I think everyone’s going to be okay with that,” the euro zone official said after the Sunday conference call. “Everyone will find a way to tweak the numbers.”
A number of measures, including restructuring the accrued interest portion or reducing the “sweeteners,” are being considered to move the figure closer to 120, a euro zone official familiar with the negotiations said.
There are also discussions about marginally lowering the interest rate on 110 billion euros of bilateral loans already made to Greece in May 2010 – the first package of support – to lighten the financing burden on Athens.
Central banks could help too.
The ECB is weighing up whether to allow Greek bonds held in euro zone central banks’ investment portfolios to be subject to the same writedowns private investors are set to take, central bank sources told Reuters on Friday.
The central banks hold around 20 billion euros of Greek bonds in their traditional investment portfolios and the ECB holds about double that amount from its emergency bond-buying program. It has also signaled it could forego the profits made on the latter at some point.
If the finance ministers do succeed in reaching an agreement, it will provide immediate relief to Athens and financial markets, which have been kept guessing since the bailout package was announced last October.
But no one is pretending it will end Greece’s problems. Figures last week showed its economy shrank 7 percent year-on-year in the last quarter of 2011, much more than expected, with further cuts likely to make matters worse.
The troika, responsible for monitoring Greece’s reform progress, carries out quarterly reviews, while the European Commission will soon have dozens more monitors on the ground.
Already there is concern that at any one of those reviews of the new program – if it is approved on Monday – Greece will be found to be behind, especially if GDP continues to slump.
That will again raise the threat the country will have to default if it cannot meet its obligations, and invite questions about its ability to remain in the euro zone.
($1 = 0.7597 euros)
(Additional reporting by Daniel Flynn in Paris, Terri Kinnunen in Helsinki and George Georgiopoulos in Athens; writing by Mike Peacock; editing by Elizabeth Piper)http://tourism9.com/ http://vkins.com/
Decision day for 2nd Greek bailout despite financing gaps
BRUSSELS (Reuters) – Euro zone finance ministers are expected to approve a second bailout for Greece on Monday to try to draw a line under months of uncertainty that has shaken the currency bloc, although there is work to be done to make the figures add up.
Diplomats and economists say they do not expect the package to resolve Greece’s economic problems. That could take a decade or more, a bleak prospect that brought thousands of Greeks onto the streets to protest austerity measures again on Sunday.
The ministers need to agree new measures to square the numbers, given the ever-worsening state of the Greek economy. But they say an agreement on Monday will help restructure the country’s vast debts, put it on a more stable financial footing and keep it inside the 17-country single currency zone.
Senior officials from euro zone finance ministries and the European Central Bank held a conference call on Sunday to go over the final details of the 130-billion-euro programme, including a debt sustainability analysis critical to the International Monetary Fund.
While there is scepticism in Germany and other countries that Greece will be able to live up to its commitments – including implementing 3.3 billion euros of spending cuts and tax increases – officials said momentum was building for approval of the deal.
French Finance Minister Francois Baroin said all the elements were in place to reach an agreement.
“It cannot wait any longer … Greece has debt payments in March and could find itself in bankruptcy, something which France has been trying to avoid for the last 18 months,” he told Europe 1 radio on Monday.
Finnish Finance Minister Jutta Urpilainen said Greece had done all that had been asked of it.
“There are many open details … A big issue is that we have to get Greece’s debt on a level that is sustainable and enables Greece to survive,” she told reporters in Helsinki.
A euro zone official in contact with junior ministers involved in the Sunday conference call said the financing gaps were not so large that they risked derailing the whole process.
“I don’t see anybody wanting to be responsible for pulling the plug on the deal at this late stage,” he said.
“The gut feeling is that this is going to go through – everyone feels the pressure this time to deliver,” he said, indicating that the Netherlands, Finland and Germany, which have been the most critical of Athens‘ ability to commit, looked likely to come on board if the financing gaps could be closed.
GREEK ANGER UNABATED
Several thousand Greeks demonstrated on Sunday against the austerity measures to reduce the country’s debt, although the numbers were much lower than earlier protests.
Greek Prime Minister Lucas Papademos flew to Brussels for last-minute preparations as about 3,000 demonstrators massed on the capital’s central Syntagma square.
Riot police shielded the national assembly to prevent a repeat of riots a week ago when masked youths torched buildings and looted shops across Athens.
Under one crucial element of the deal, Greece will have around 100 billion euros of debt written off via a restructuring involving private-sector holders of Greek government bonds.
Banks and insurers will swap bonds they hold for longer-dated securities that pay a lower coupon, resulting in a real 70 percent reduction in the value of the assets.
The bond exchange is expected to launch on March 8 and complete three days later, Athens said on Saturday. That means a 14.5-billion-euro bond repayment due on March 20 would be restructured, allowing Greece to avoid default.
The vast majority of the funds in the 130-billion-euro programme will be used to finance the bond swap and to ensure that Greece’s banking system remains stable: 30 billion euros will go to “sweeteners” to get the private sector to sign up to the swap, 23 billion will go to recapitalise Greek banks.
A further 35 billion will allow Greece to finance the buying back of the bonds, and 5.7 billion will go to paying off the interest accrued on the bonds being traded in.
The overall objective is to reduce Greece’s debts from 160 percent of GDP to around 120 percent by 2020 – the figure and timeframe that the IMF, ECB and the European Commission, together known as the troika, have established as sustainable.
MEETING THE TARGET
The focus of Monday’s finance ministers‘ meeting will be what “around 120 percent” means in practice.
A debt sustainability report delivered to euro zone finance ministers last week showed that under the main scenario, Greek debt will only fall to 129 percent by 2020.
The IMF has said if the ratio cannot be cut to around 120 percent, it may not be able to help finance the Greek programme.
U.S. Treasury Secretary Tim Geithner urged the International Monetary Fund to support the programme.
“This is a very strong and very difficult package of reforms, deserving of support of the international community and the IMF,” Geithner said in a statement on Sunday.
As well as working to get the number down, there are moves to convince members of the troika that a debt level of 123-125 percent in 2020 would be sustainable.
“If we can get it down to 123 or 124 percent, I think everyone’s going to be okay with that,” the euro zone official said after the Sunday conference call. “Everyone will find a way to tweak the numbers.”
A number of measures, including restructuring the accrued interest portion or reducing the “sweeteners,” are being considered to move the figure closer to 120, a euro zone official familiar with the negotiations said.
There are also discussions about marginally lowering the interest rate on 110 billion euros of bilateral loans already made to Greece in May 2010 – the first package of support – to lighten the financing burden on Athens.
Central banks could help too.
The ECB is weighing up whether to allow Greek bonds held in euro zone central banks’ investment portfolios to be subject to the same writedowns private investors are set to take, central bank sources told Reuters on Friday.
The central banks hold around 20 billion euros of Greek bonds in their traditional investment portfolios and the ECB holds about double that amount from its emergency bond-buying programme. It has also signalled it could forego the profits made on the latter at some point.
If the finance ministers do succeed in reaching an agreement, it will provide immediate relief to Athens and financial markets, which have been kept guessing since the bailout package was announced last October.
But no one is pretending it will end Greece’s problems. Figures last week showed its economy shrank 7 percent year-on-year in the last quarter of 2011, much more than expected, with further cuts likely to make matters worse.
The troika, responsible for monitoring Greece’s reform progress, carries out quarterly reviews, while the European Commission will soon have dozens more monitors on the ground.
Already there is concern that at any one of those reviews of the new programme – if it is approved on Monday – Greece will be found to be behind, especially if GDP continues to slump.
That will again raise the threat the country will have to default if it cannot meet its obligations, and invite questions about its ability to remain in the euro zone.
(Additional reporting by Daniel Flynn in Paris, Terri Kinnunen in Helsinki and George Georgiopoulos in Athens; writing by Mike Peacock; editing by Elizabeth Piper)http://tourism9.com/ http://vkins.com/
Diplomats and economists say they do not expect the package to resolve Greece’s economic problems. That could take a decade or more, a bleak prospect that brought thousands of Greeks onto the streets to protest austerity measures again on Sunday.
The ministers need to agree new measures to square the numbers, given the ever-worsening state of the Greek economy. But they say an agreement on Monday will help restructure the country’s vast debts, put it on a more stable financial footing and keep it inside the 17-country single currency zone.
Senior officials from euro zone finance ministries and the European Central Bank held a conference call on Sunday to go over the final details of the 130-billion-euro programme, including a debt sustainability analysis critical to the International Monetary Fund.
While there is scepticism in Germany and other countries that Greece will be able to live up to its commitments – including implementing 3.3 billion euros of spending cuts and tax increases – officials said momentum was building for approval of the deal.
French Finance Minister Francois Baroin said all the elements were in place to reach an agreement.
“It cannot wait any longer … Greece has debt payments in March and could find itself in bankruptcy, something which France has been trying to avoid for the last 18 months,” he told Europe 1 radio on Monday.
Finnish Finance Minister Jutta Urpilainen said Greece had done all that had been asked of it.
“There are many open details … A big issue is that we have to get Greece’s debt on a level that is sustainable and enables Greece to survive,” she told reporters in Helsinki.
A euro zone official in contact with junior ministers involved in the Sunday conference call said the financing gaps were not so large that they risked derailing the whole process.
“I don’t see anybody wanting to be responsible for pulling the plug on the deal at this late stage,” he said.
“The gut feeling is that this is going to go through – everyone feels the pressure this time to deliver,” he said, indicating that the Netherlands, Finland and Germany, which have been the most critical of Athens‘ ability to commit, looked likely to come on board if the financing gaps could be closed.
GREEK ANGER UNABATED
Several thousand Greeks demonstrated on Sunday against the austerity measures to reduce the country’s debt, although the numbers were much lower than earlier protests.
Greek Prime Minister Lucas Papademos flew to Brussels for last-minute preparations as about 3,000 demonstrators massed on the capital’s central Syntagma square.
Riot police shielded the national assembly to prevent a repeat of riots a week ago when masked youths torched buildings and looted shops across Athens.
Under one crucial element of the deal, Greece will have around 100 billion euros of debt written off via a restructuring involving private-sector holders of Greek government bonds.
Banks and insurers will swap bonds they hold for longer-dated securities that pay a lower coupon, resulting in a real 70 percent reduction in the value of the assets.
The bond exchange is expected to launch on March 8 and complete three days later, Athens said on Saturday. That means a 14.5-billion-euro bond repayment due on March 20 would be restructured, allowing Greece to avoid default.
The vast majority of the funds in the 130-billion-euro programme will be used to finance the bond swap and to ensure that Greece’s banking system remains stable: 30 billion euros will go to “sweeteners” to get the private sector to sign up to the swap, 23 billion will go to recapitalise Greek banks.
A further 35 billion will allow Greece to finance the buying back of the bonds, and 5.7 billion will go to paying off the interest accrued on the bonds being traded in.
The overall objective is to reduce Greece’s debts from 160 percent of GDP to around 120 percent by 2020 – the figure and timeframe that the IMF, ECB and the European Commission, together known as the troika, have established as sustainable.
MEETING THE TARGET
The focus of Monday’s finance ministers‘ meeting will be what “around 120 percent” means in practice.
A debt sustainability report delivered to euro zone finance ministers last week showed that under the main scenario, Greek debt will only fall to 129 percent by 2020.
The IMF has said if the ratio cannot be cut to around 120 percent, it may not be able to help finance the Greek programme.
U.S. Treasury Secretary Tim Geithner urged the International Monetary Fund to support the programme.
“This is a very strong and very difficult package of reforms, deserving of support of the international community and the IMF,” Geithner said in a statement on Sunday.
As well as working to get the number down, there are moves to convince members of the troika that a debt level of 123-125 percent in 2020 would be sustainable.
“If we can get it down to 123 or 124 percent, I think everyone’s going to be okay with that,” the euro zone official said after the Sunday conference call. “Everyone will find a way to tweak the numbers.”
A number of measures, including restructuring the accrued interest portion or reducing the “sweeteners,” are being considered to move the figure closer to 120, a euro zone official familiar with the negotiations said.
There are also discussions about marginally lowering the interest rate on 110 billion euros of bilateral loans already made to Greece in May 2010 – the first package of support – to lighten the financing burden on Athens.
Central banks could help too.
The ECB is weighing up whether to allow Greek bonds held in euro zone central banks’ investment portfolios to be subject to the same writedowns private investors are set to take, central bank sources told Reuters on Friday.
The central banks hold around 20 billion euros of Greek bonds in their traditional investment portfolios and the ECB holds about double that amount from its emergency bond-buying programme. It has also signalled it could forego the profits made on the latter at some point.
If the finance ministers do succeed in reaching an agreement, it will provide immediate relief to Athens and financial markets, which have been kept guessing since the bailout package was announced last October.
But no one is pretending it will end Greece’s problems. Figures last week showed its economy shrank 7 percent year-on-year in the last quarter of 2011, much more than expected, with further cuts likely to make matters worse.
The troika, responsible for monitoring Greece’s reform progress, carries out quarterly reviews, while the European Commission will soon have dozens more monitors on the ground.
Already there is concern that at any one of those reviews of the new programme – if it is approved on Monday – Greece will be found to be behind, especially if GDP continues to slump.
That will again raise the threat the country will have to default if it cannot meet its obligations, and invite questions about its ability to remain in the euro zone.
(Additional reporting by Daniel Flynn in Paris, Terri Kinnunen in Helsinki and George Georgiopoulos in Athens; writing by Mike Peacock; editing by Elizabeth Piper)http://tourism9.com/ http://vkins.com/
Decision day for 2nd Greek bailout, financing gaps remain
By Luke Baker
BRUSSELS (Reuters) – Euro zone finance ministers are expected to approve a second bailout for Greece on Monday, a move they hope will draw a line under months of turmoil that has shaken the currency bloc, although there is work to be done to make the figures add up.
Diplomats and economists do not expect the package to resolve Greece’s economic problems: that could take up to a decade or more – a bleak picture increasingly apparent to several thousand Greeks who demonstrated on Sunday against seemingly endless austerity measures.
The ministers still need to agree new measures to square the numbers, given the ever-worsening state of the Greek economy. But they hope agreement on Monday will help restructure the country’s vast debts, put it on a more stable financial footing and keep it inside the single currency zone.
Senior officials from euro zone finance ministries and the European Central Bank held a conference call on Sunday to go over the final details of the 130-billion-euro programme, including a debt sustainability analysis critical to the IMF.
While there is still scepticism in Germany and other countries that Greece will be able to live up to its commitments – including implementing 3.3 billion euros of spending cuts and tax increases – officials said momentum was building for approval of the deal.
“At the moment it appears it will go exactly this way,” Austrian Finance Minister Maria Fekter said on Sunday when asked in a TV interview if the package would be approved. “I don’t think there is a majority to go a different way because a different way is enormously arduous and costs lots and lots of money.”
A euro zone official in contact with junior ministers involved in the Sunday conference call said that, while there were still gaps to be filled, they were not so large that they risked derailing the whole process.
“I don’t see anybody wanting to be responsible for pulling the plug on the deal at this late stage,” he said.
“The gut feeling is that this is going to go through – everyone feels the pressure this time to deliver,” he said, indicating that the Netherlands, Finland and Germany, which have been the most critical of Athens‘ ability to commit, looked likely to come on board if the financing gaps could be closed.
GREEK ANGER UNABATED
Several thousand Greeks demonstrated on Sunday against punishing austerity measures to reduce their country’s debt, on the eve of the make-or-break talks.
Greek Prime Minister Lucas Papademos flew to Brussels for last-minute preparations as about 3,000 demonstrators massed on the capital’s central Syntagma square.
Riot police shielded the national assembly, braced against a repeat of riots a week ago that saw buildings torched and looted across downtown Athens after a much larger rally involving tens of thousands.
Under one crucial element of the deal, Greece will have around 100 billion euros of debt written off via a restructuring involving private-sector holders of Greek government bonds.
Banks and insurers will swap bonds they hold for longer-dated securities that pay a lower coupon, resulting in a real 70 percent reduction in the value of the assets.
The bond exchange is expected to launch on March 8 and complete three days later, Athens said on Saturday. That means a 14.5-billion-euro bond repayment due on March 20 would be restructured, allowing Greece to avoid default.
The vast majority of the funds in the 130-billion-euro programme will be used to finance the bond swap and to ensure that Greece’s banking system remains stable: 30 billion euros will go to “sweeteners” to get the private sector to sign up to the swap, 23 billion will go to recapitalise Greek banks.
A further 35 billion will allow Greece to finance the buying back of the bonds, and 5.7 billion will go to paying off the interest accrued on the bonds being traded in.
The overall objective is to reduce Greece’s debts from 160 percent of GDP to around 120 percent by 2020 – the figure and timeframe that the IMF, ECB and the European Commission, together known as the troika, have established as sustainable.
MEETING THE TARGET
The focus of discussion in Sunday’s conference call – and the issue expected to dominate the finance ministers‘ meeting on Monday – was what “around 120 percent” means in practice.
A debt sustainability report delivered to euro zone finance ministers last week showed that under the main scenario, Greek debt will only fall to 129 percent by 2020.
The IMF has said if the ratio cannot be cut to around 120 percent, it may not be able to help finance the Greek programme.
U.S. Treasury Secretary Tim Geithner urged the International Monetary Fund to support the programme.
“This is a very strong and very difficult package of reforms, deserving of support of the international community and the IMF,” Geithner said in a statement on Sunday.
As well as working to get the number down, there are moves to convince members of the troika that a debt level of 123-125 percent in 2020 would still be sustainable.
“If we can get it down to 123 or 124 percent, I think everyone’s going to be okay with that,” the euro zone official said after the Sunday conference call. “Everyone will find a way to tweak the numbers.”
A number of measures, including restructuring the accrued interest portion or reducing the “sweeteners”, are being considered to move the 129 figure closer to 120, a euro zone official familiar with the negotiations said.
There are also discussions about marginally lowering the interest rate on 110 billion euros of bilateral loans already made to Greece in May 2010 – the first package of support – to lighten the financing burden on Athens.
Central banks could help too.
The ECB is weighing up whether to allow Greek bonds held in euro zone central banks’ investment portfolios to be subject to the same writedowns private investors are set to take, central bank sources told Reuters on Friday.
The central banks hold around 20 billion euros of Greek bonds in their traditional investment portfolios and the ECB holds about double that amount from its emergency bond-buying programme. It has also signalled it could forego the profits made on the latter at some point.
“All the discussions I will have … until Sunday night will try to move the figure nearer to the target,” Luxembourg’s Jean-Claude Juncker, who will chair Monday’s finance ministers’ meeting, said on Friday, referring to the 120 figure.
If the finance ministers do succeed in reaching an agreement on Monday, it will provide immediate relief to Athens and financial markets, which have been kept guessing since the bailout package was announced last October.
But no one is pretending it will end Greece’s problems. Figures last week showed its economy shrank 7 percent year-on-year in the last quarter of 2011, much more than expected, with further cuts likely to make matters worse.
The troika, which is responsible for monitoring Greece’s reform progress, carries out quarterly reviews, while the European Commission will soon have dozens more monitors on the ground in Athens as part of the second package.
Already there is concern that at any one of those reviews of the new programme – if it is approved on Monday – Greece will be found to be behind, especially if GDP continues to slump.
That will again raise the threat the country will have to default if it cannot meet its obligations, and invite questions about its ability to remain in the euro zone.
(Additional reporting by George Georgiopoulos, writing by Luke Baker and Mike Peacock, editing by Tim Pearce)
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BRUSSELS (Reuters) – Euro zone finance ministers are expected to approve a second bailout for Greece on Monday, a move they hope will draw a line under months of turmoil that has shaken the currency bloc, although there is work to be done to make the figures add up.
Diplomats and economists do not expect the package to resolve Greece’s economic problems: that could take up to a decade or more – a bleak picture increasingly apparent to several thousand Greeks who demonstrated on Sunday against seemingly endless austerity measures.
The ministers still need to agree new measures to square the numbers, given the ever-worsening state of the Greek economy. But they hope agreement on Monday will help restructure the country’s vast debts, put it on a more stable financial footing and keep it inside the single currency zone.
Senior officials from euro zone finance ministries and the European Central Bank held a conference call on Sunday to go over the final details of the 130-billion-euro programme, including a debt sustainability analysis critical to the IMF.
While there is still scepticism in Germany and other countries that Greece will be able to live up to its commitments – including implementing 3.3 billion euros of spending cuts and tax increases – officials said momentum was building for approval of the deal.
“At the moment it appears it will go exactly this way,” Austrian Finance Minister Maria Fekter said on Sunday when asked in a TV interview if the package would be approved. “I don’t think there is a majority to go a different way because a different way is enormously arduous and costs lots and lots of money.”
A euro zone official in contact with junior ministers involved in the Sunday conference call said that, while there were still gaps to be filled, they were not so large that they risked derailing the whole process.
“I don’t see anybody wanting to be responsible for pulling the plug on the deal at this late stage,” he said.
“The gut feeling is that this is going to go through – everyone feels the pressure this time to deliver,” he said, indicating that the Netherlands, Finland and Germany, which have been the most critical of Athens‘ ability to commit, looked likely to come on board if the financing gaps could be closed.
GREEK ANGER UNABATED
Several thousand Greeks demonstrated on Sunday against punishing austerity measures to reduce their country’s debt, on the eve of the make-or-break talks.
Greek Prime Minister Lucas Papademos flew to Brussels for last-minute preparations as about 3,000 demonstrators massed on the capital’s central Syntagma square.
Riot police shielded the national assembly, braced against a repeat of riots a week ago that saw buildings torched and looted across downtown Athens after a much larger rally involving tens of thousands.
Under one crucial element of the deal, Greece will have around 100 billion euros of debt written off via a restructuring involving private-sector holders of Greek government bonds.
Banks and insurers will swap bonds they hold for longer-dated securities that pay a lower coupon, resulting in a real 70 percent reduction in the value of the assets.
The bond exchange is expected to launch on March 8 and complete three days later, Athens said on Saturday. That means a 14.5-billion-euro bond repayment due on March 20 would be restructured, allowing Greece to avoid default.
The vast majority of the funds in the 130-billion-euro programme will be used to finance the bond swap and to ensure that Greece’s banking system remains stable: 30 billion euros will go to “sweeteners” to get the private sector to sign up to the swap, 23 billion will go to recapitalise Greek banks.
A further 35 billion will allow Greece to finance the buying back of the bonds, and 5.7 billion will go to paying off the interest accrued on the bonds being traded in.
The overall objective is to reduce Greece’s debts from 160 percent of GDP to around 120 percent by 2020 – the figure and timeframe that the IMF, ECB and the European Commission, together known as the troika, have established as sustainable.
MEETING THE TARGET
The focus of discussion in Sunday’s conference call – and the issue expected to dominate the finance ministers‘ meeting on Monday – was what “around 120 percent” means in practice.
A debt sustainability report delivered to euro zone finance ministers last week showed that under the main scenario, Greek debt will only fall to 129 percent by 2020.
The IMF has said if the ratio cannot be cut to around 120 percent, it may not be able to help finance the Greek programme.
U.S. Treasury Secretary Tim Geithner urged the International Monetary Fund to support the programme.
“This is a very strong and very difficult package of reforms, deserving of support of the international community and the IMF,” Geithner said in a statement on Sunday.
As well as working to get the number down, there are moves to convince members of the troika that a debt level of 123-125 percent in 2020 would still be sustainable.
“If we can get it down to 123 or 124 percent, I think everyone’s going to be okay with that,” the euro zone official said after the Sunday conference call. “Everyone will find a way to tweak the numbers.”
A number of measures, including restructuring the accrued interest portion or reducing the “sweeteners”, are being considered to move the 129 figure closer to 120, a euro zone official familiar with the negotiations said.
There are also discussions about marginally lowering the interest rate on 110 billion euros of bilateral loans already made to Greece in May 2010 – the first package of support – to lighten the financing burden on Athens.
Central banks could help too.
The ECB is weighing up whether to allow Greek bonds held in euro zone central banks’ investment portfolios to be subject to the same writedowns private investors are set to take, central bank sources told Reuters on Friday.
The central banks hold around 20 billion euros of Greek bonds in their traditional investment portfolios and the ECB holds about double that amount from its emergency bond-buying programme. It has also signalled it could forego the profits made on the latter at some point.
“All the discussions I will have … until Sunday night will try to move the figure nearer to the target,” Luxembourg’s Jean-Claude Juncker, who will chair Monday’s finance ministers’ meeting, said on Friday, referring to the 120 figure.
If the finance ministers do succeed in reaching an agreement on Monday, it will provide immediate relief to Athens and financial markets, which have been kept guessing since the bailout package was announced last October.
But no one is pretending it will end Greece’s problems. Figures last week showed its economy shrank 7 percent year-on-year in the last quarter of 2011, much more than expected, with further cuts likely to make matters worse.
The troika, which is responsible for monitoring Greece’s reform progress, carries out quarterly reviews, while the European Commission will soon have dozens more monitors on the ground in Athens as part of the second package.
Already there is concern that at any one of those reviews of the new programme – if it is approved on Monday – Greece will be found to be behind, especially if GDP continues to slump.
That will again raise the threat the country will have to default if it cannot meet its obligations, and invite questions about its ability to remain in the euro zone.
(Additional reporting by George Georgiopoulos, writing by Luke Baker and Mike Peacock, editing by Tim Pearce)
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2012年1月2日星期一
Credit Agricole to cut jobs as loss looms
PARIS (Reuters) – Credit Agricole will make a 2011 loss, write off 2.5 billion euros ($3.2 billion) worth of assets and cut 2,350 jobs in a cull of its investment banking operations, the French bank said on Wednesday in its second profit warning of the year.
The warning reflects mounting pressure on lenders to curtail risky activities to meet tougher capital standards even as they wrestle worsening economies and slumping markets. The deepening euro zone debt crisis has slammed French banks in particular as traditional sources of dollar funding have evaporated.
“These are all things we would have expected to happen at some point, but putting it all in one quarter, in this kind of market, is unhelpful,” said a London based analyst who did not want to be named. “The stock is at bombed-out levels already … What will be key in how bad this gets is what they tell us about the ongoing business.”
The bank is following in the footsteps of larger domestic rivals BNP Paribasand Societe Generale , which have also announced job cuts primarily in investment banking as they seek to cut debt and wean themselves off funding markets frozen by the economic slump.
The pressure on the French banks’ capital and liquidity has led to recurring speculation that they could eventually seek a government bailout, but Credit Agricole Chief Executive Jean-Paul Chifflet denied that it would need any help in reaching stringent Basel III regulations.
“We will meet Basel III with our own resources,” he told a conference call.
That will call for some bitter medicine.
Credit Agricole, which in recent years abandoned its humble agricultural origins in favor of international growth, will exit 21 of the 55 countries where it operates and shutter entire businesses like equity derivatives and commodities.
MARKET TURMOIL
The writedown includes 1.3 billion euros to reflect the shrinkage of its investment banking division and 1.23 billion euros as writedowns of minority stakes, such as those in Spain’s Bankinterand Portugal’s Banco Espirito Santo .
Chifflet said in an interview with Les Echos newspaper that the bank was mulling the sale of stakes in both lenders, although he ruled out the sale of its holding in its Newedge joint venture with Societe Generale.
The bank also shelved its 2014 financial goals and eliminated its dividend for this year to preserve capital.
Analysts had expected France’s No. 3 lender to post a full-year profit of 2.4 billion euros after it was profitable in all previous quarters.
In July, Credit Agricole warned that deepening problems at its Emporiki Bank unit in Greece would wipe nearly 1 billion euros off its first-half results.
The job losses include 1,750 at Credit Agricole’s corporate and investment bank, which employs 13,000 people, and 600 at its factoring and consumer finance arms.
The bulk of the job losses will take place internationally, although 550 investment banking and 300 consumer finance jobs will be cut in France.
Credit Agricole shares slumped 6.7 percent to close at 4.23 euros, part of a wider rout in French banking shares which saw Societe Generaleslide 8 percent and BNP Paribas lose 7.4 percent.
More than six months of intense market turmoil sparked by the euro zone debt crisis is pummeling investment banks globally, denting their bond and stock trading income and sparking a wave of layoffs in Asia, the U.S. and Europe.
JOB LOSS TALLY GROWS
Citigroup was last week among the latest to press ahead with job cuts, while banks in some of the crisis hotspots — such as Italy’s UniCreditand Intesa Sanpaolo — are also laying off thousands of people.
More than 120,000 job losses have been announced this year, and many in the industry fear the tally will be greater than at the height of the financial crisis in 2008, as redundancies continue into 2012.
Like its French rivals, Credit Agricole is primarily pulling back in certain financing businesses, such as those in dollars, which have become harder for it to access, and will cut staff accordingly.
It also has a European equity broker, Chevreux, and a majority stake in Asian brokerage CLSA. But the bulk of cuts are likely to fall in fixed-income, which houses its rates and credit divisions, analysts said.
Credit trading in particular has come under pressure at all banks this year as wary investors shy away from the market and new regulation bites.
The recently appointed Chifflet has espoused a back-to-basics focus on retail banking in France and Europe after moves like the purchase of Emporiki backfired, rendering it deeply sensitive to turmoil in the eurozone economy.
Chifflet’s team is mulling various ways of bolstering the bank’s balance sheet, banking sources say, even though Credit Agricole’s robust parent network of regional banks has provided a cushion that has made raising additional capital unnecessary.
This may include more deal-making. The bank is close to announcing the sale of its private-equity activities, while it has also struck a $374 million deal to sell minority stakes in its CLSA and Cheuvreux brokerage brands to Chinese brokerage Citic Securities .
While Credit Agricole would be open to letting Citic increase its stake in the ventures — now at 19.9 percent — it aims to at least keep majority control, according to a person familiar with the bank’s thinking.
(Editing by David Holmes)
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The warning reflects mounting pressure on lenders to curtail risky activities to meet tougher capital standards even as they wrestle worsening economies and slumping markets. The deepening euro zone debt crisis has slammed French banks in particular as traditional sources of dollar funding have evaporated.
“These are all things we would have expected to happen at some point, but putting it all in one quarter, in this kind of market, is unhelpful,” said a London based analyst who did not want to be named. “The stock is at bombed-out levels already … What will be key in how bad this gets is what they tell us about the ongoing business.”
The bank is following in the footsteps of larger domestic rivals BNP Paribas
The pressure on the French banks’ capital and liquidity has led to recurring speculation that they could eventually seek a government bailout, but Credit Agricole Chief Executive Jean-Paul Chifflet denied that it would need any help in reaching stringent Basel III regulations.
“We will meet Basel III with our own resources,” he told a conference call.
That will call for some bitter medicine.
Credit Agricole, which in recent years abandoned its humble agricultural origins in favor of international growth, will exit 21 of the 55 countries where it operates and shutter entire businesses like equity derivatives and commodities.
MARKET TURMOIL
The writedown includes 1.3 billion euros to reflect the shrinkage of its investment banking division and 1.23 billion euros as writedowns of minority stakes, such as those in Spain’s Bankinter
Chifflet said in an interview with Les Echos newspaper that the bank was mulling the sale of stakes in both lenders, although he ruled out the sale of its holding in its Newedge joint venture with Societe Generale.
The bank also shelved its 2014 financial goals and eliminated its dividend for this year to preserve capital.
Analysts had expected France’s No. 3 lender to post a full-year profit of 2.4 billion euros after it was profitable in all previous quarters.
In July, Credit Agricole warned that deepening problems at its Emporiki Bank unit in Greece would wipe nearly 1 billion euros off its first-half results.
The job losses include 1,750 at Credit Agricole’s corporate and investment bank, which employs 13,000 people, and 600 at its factoring and consumer finance arms.
The bulk of the job losses will take place internationally, although 550 investment banking and 300 consumer finance jobs will be cut in France.
Credit Agricole shares slumped 6.7 percent to close at 4.23 euros, part of a wider rout in French banking shares which saw Societe Generale
More than six months of intense market turmoil sparked by the euro zone debt crisis is pummeling investment banks globally, denting their bond and stock trading income and sparking a wave of layoffs in Asia, the U.S. and Europe.
JOB LOSS TALLY GROWS
Citigroup was last week among the latest to press ahead with job cuts, while banks in some of the crisis hotspots — such as Italy’s UniCredit
More than 120,000 job losses have been announced this year, and many in the industry fear the tally will be greater than at the height of the financial crisis in 2008, as redundancies continue into 2012.
Like its French rivals, Credit Agricole is primarily pulling back in certain financing businesses, such as those in dollars, which have become harder for it to access, and will cut staff accordingly.
It also has a European equity broker, Chevreux, and a majority stake in Asian brokerage CLSA. But the bulk of cuts are likely to fall in fixed-income, which houses its rates and credit divisions, analysts said.
Credit trading in particular has come under pressure at all banks this year as wary investors shy away from the market and new regulation bites.
The recently appointed Chifflet has espoused a back-to-basics focus on retail banking in France and Europe after moves like the purchase of Emporiki backfired, rendering it deeply sensitive to turmoil in the eurozone economy.
Chifflet’s team is mulling various ways of bolstering the bank’s balance sheet, banking sources say, even though Credit Agricole’s robust parent network of regional banks has provided a cushion that has made raising additional capital unnecessary.
This may include more deal-making. The bank is close to announcing the sale of its private-equity activities, while it has also struck a $374 million deal to sell minority stakes in its CLSA and Cheuvreux brokerage brands to Chinese brokerage Citic Securities .
While Credit Agricole would be open to letting Citic increase its stake in the ventures — now at 19.9 percent — it aims to at least keep majority control, according to a person familiar with the bank’s thinking.
(Editing by David Holmes)
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