Monday

16th Sep 2019

Banks, Europe haggle over scale of bond haircut

  • European banks have received an estimated €4.6 trillion in support from public coffers since the start of the crisis (Photo: Images_of_Money)

The world’s banks have delivered what they are describing as a “significant” new offer on the scale of a haircut on their holdings of Greek sovereign debt, but no details have appeared since their earlier stance described by one EU diplomat as “playing hardball”.

The director of the Institute for International Finance (IIF), the trade association of the global financial sector - which is negotiating with EU officials over the scale of the writedown, said in a statement on Wednesday (26 October) afternoon: "A significant new offer was made by Mr. Charles Dallara, IIF managing director, on behalf of private investors in discussions in Brussels with European officials yesterday."

Read and decide

Join EUobserver today

Support quality EU news

Get instant access to all articles — and 18 year's of archives. 30 days free trial.

... or join as a group

No precise figures were released, however. It is understood that the IIF until now would not budge from a write-down percentage of 40 percent, while EU representatives have pressed for a cut of between 50 and 60 percent.

The IMF for its part has not ruled out a cut of up to 70 percent.

The banks have said that if European leaders insist on a higher figure, the 'voluntary' haircut would be viewed as being imposed and as such would categorise the move as a default.

"There are limits ... to what could be considered as voluntary to the investor base and to broader market participants," Dallara said on Tuesday, AFP reports.

"Any approach that is not based on co-operative discussions and involves unilateral actions would be tantamount to default."

Earlier on Wednesday, an EU official said there was anger at the banking association’s position, given the scale of the public funds that have been committed to saving Europe’s financial institutions, an estimated €4.6 trillion since the start of the crisis.

"There is frustration at all levels [at the stance of the IIF]," the diplomat said. "They’re playing hardball."

The same day, both the Greek finance minister, Evangelos Venizelos, and the head of the euro group of states, Luxembourgish Prime Minister Jean-Claude Juncker, predicted that in the end, the most likely final figure would amount to a figure somewhere in between the two sides, in the region of 50 percent.

Whether any announcement on such a cut will be announced immediately after Wednesday’s summits remains an open question.

Commission to unveil bank bail-out plan

European Commission President Jose Manuel Barroso has said that the EU executive will put forward plans for a fresh round of bank bail-outs across Europe on Wednesday.

Merkel, Sarkozy will do ‘whatever necessary’ to bail-out banks

Financial markets hoping for the outline of some grand strategy for dealing with the ever-worsening eurozone crisis are likely to be disappointed by the vague announcement offered up by the French president and German chancellor after emergency talks in Berlin on Sunday.

Belgium rescues troubled bank amid ratings warning

The Belgian state has said it will pay €4 billion to purchase Dexia, a Franco-Belgian-Luxembourg bank with high exposure to Greek debt. The move comes two days after Moody's warned it may downgrade Belgium's rating.

EU agrees to fresh bank bail-outs

The EU's 27 member states have finally agreed to a recapitalisation of the region’s banks. Eastern powers have at the same time managed to win a commitment that they will be protected against capital outflows as a result.

Banks stonewall EU leaders on haircut

Negotiations between EU leaders and representatives of the global banking industry over the scale of losses the financial institutions are willing to take on Greek debt have all but broken down.

News in Brief

  1. Nearly 100 refugees evacuated from Libya to Italy
  2. Juncker to meet Johnson on Monday
  3. First Hungary 'Article 7' hearing set for Monday
  4. Vestager picks Danish EU ambassador as cabinet head
  5. Commissioner hearings will start 30 September
  6. Italy says EU countries agree to take in rescued migrants
  7. Germany to organise Libya conference on arms embargo
  8. European Parliament to support another Brexit delay

Opinion

Why von der Leyen must put rights at core of business

Ursula von der Leyen's in-tray must include those European executives on trial for systematic workplace harassment, the break-up of European slavery rings, and allegations of European companies' abuse in palm oil, including child labour, land grabs, and deforestation.

Stakeholders' Highlights

  1. Nordic Council of MinistersNew programme studies infectious diseases and antibiotic resistance
  2. UNESDAUNESDA reduces added sugars 11.9% between 2015-2017
  3. International Partnership for Human RightsEU-Uzbekistan Human Rights Dialogue: EU to raise key fundamental rights issues
  4. Nordic Council of MinistersNo evidence that social media are harmful to young people
  5. Nordic Council of MinistersCanada to host the joint Nordic cultural initiative 2021
  6. Vote for the EU Sutainable Energy AwardsCast your vote for your favourite EUSEW Award finalist. You choose the winner of 2019 Citizen’s Award.
  7. Nordic Council of MinistersEducation gets refugees into work
  8. Counter BalanceSign the petition to help reform the EU’s Bank
  9. UNICEFChild rights organisations encourage candidates for EU elections to become Child Rights Champions
  10. UNESDAUNESDA Outlines 2019-2024 Aspirations: Sustainability, Responsibility, Competitiveness
  11. Counter BalanceRecord citizens’ input to EU bank’s consultation calls on EIB to abandon fossil fuels
  12. International Partnership for Human RightsAnnual EU-Turkmenistan Human Rights Dialogue takes place in Ashgabat

Latest News

  1. Brexit and new commission in focus This WEEK
  2. As recession looms Europe needs more spending
  3. How should the EU handle Russia now?
  4. EU defence bravado criticised by auditors
  5. Central European leaders demand EU Balkan accession
  6. Luxembourg's cannabis legalisation is EU opportunity
  7. The Catalan National Day has been a success. Why?
  8. Why I'm voting against the von der Leyen commission

Join EUobserver

Support quality EU news

Join us