ANALYSIS:What appears to have only become clear to Berlin after talks with German banks last week is that much Greek paper held by the country's banks matures after 2014

TALKS BETWEEN euro zone governments and private holders of Greek bonds could last several more weeks as European leaders try to carve out terms for a new €120 billion bailout of Greece with “significant” private sector involvement.

Although European Union finance ministers agreed to a much-anticipated €8.7 billion aid payment to Greece at the weekend – thereby ensuring the debt-burdened country would not default on its sovereign bonds later this month – they were forced to put off a final deal on the much-larger second rescue package.

Euro zone finance ministers said that the “precise modalities and scale of private sector involvement” had yet to be determined.

Euro zone governments spent much of the last week haggling over the new bailout, which would be the second rescue of Athens by the European Union in just over a year.

The hold-up was caused by a German-led group of creditor countries, which has been conducting negotiations with private holders of Greek bonds in an attempt to persuade them to shoulder a significant portion of the new bailout package.

The group was unable to come to terms on the level of bondholder participation, and so a final deal on a second bailout was postponed.

European officials briefed on the discussions said that the delay was largely down to some member states requiring more time to assemble their contributions to private sector involvement.

These problems – said to be technical blips rather than potential political road blocks – made it impossible to quantify the total amount of private sector involvement at this stage and thus the EU and International Monetary Fund contributions to a second rescue package.

EU finance ministers were said still to be aiming for July 11th, when they next meet in Brussels, as the date on which to announce key points of the new programme, although it is possible that final revisions could be made to the programme as late as September.

However, German finance minister Wolfgang Schäuble claimed that the private sector involvement Berlin had pressed for was “a success”, even after German banks said last week they would contribute only about €2 billion given that their holdings of Greek bonds coming due 2013 and 2014 was relatively small.

“A few months ago, no one seriously believed that we’d get any sort of private sector participation,” Mr Schäuble told Der Spiegel magazine by way of explaining his satisfaction with the scheme so far.

What appears to have only become clear to Berlin after talks with German banks last week is that a considerable amount of the Greek paper held by the country’s banks matures after 2014.

As a result, expectations in Berlin are for a relatively modest overall sum for private sector involvement, although officials have signalled in past days that it will be big enough to deliver the “substantial” contribution the government promised the German parliament, which is increasingly restive about aid for Greece.

In a statement after the rare Saturday evening conference call, EU finance ministers were vague about the talks with the bondholders saying only that the issue would be resolved “in the coming weeks”.

Saturday’s green light for the smaller €8.7 billion payment tranche came after the Greek parliament approved a wrenching €28 billion austerity Bill last week, which the EU had set as a precondition for any additional aid.

Athens was at risk of becoming the first developed country in 60 years to default on its debt on July 15th if the aid payment was not approved.

Meanwhile, Germany released its medium-term budget plan, which showed contingency plans for future euro zone sovereign rescues would hit the federal budget. With annual payments of €4.3 billion to fund the European Stability Mechanism, the EU’s permanent bailout fund, from 2013-2015, Berlin’s new borrowing is expected to be slightly higher than forecast in March.