GERMANY’S PRIVATE banks and insurance companies have reached preliminary agreement to participate in a second aid programme for Greece, covering about €2 billion in sovereign bonds due to mature in 2014.
German finance minister Wolfgang Schäuble said yesterday this “voluntary but substantial” private-sector contribution, combined with €1.2 billion of bad bank debt, would bring Germany’s total contribution to €3.2 billion.
“I’m happy that the representatives of the financial sector have said they are ready to participate in a European package for a second aid programme for Greece,” said Mr Schäuble.
The preliminary deal showed the long-term commitment of German banks to Greece, he said, with more than half of bonds not due for maturity until after 2020.
As talks continue, German banks said the deal was an important step towards preventing a Greek default. Deutsche Bank chairman Josef Ackermann said the talks, though ongoing, were modelled on a French deal presented earlier this week.
The French model sees creditors reinvesting 70 per cent of their investment in new Greek bonds. Of this, half will be in 30-year papers and the other half in interest-free papers. Mr Ackermann said the German model would contain some “modifications”, with final agreement likely before Sunday.
“We are of the opinion that Greece must be helped [and] we are ready to do so,” he said.
Most recent Bundesbank estimates put German exposure to Greek debt at €18 billion, though private financial institutions are understood to have emptied their balance sheets of much Greek debt.
Deutsche Bank is likely to contribute less than €1 billion, while semi-nationalised Commerzbank – holding €2.9 billion – is likely to contribute substantially less.
Germany’s state-owned KfW bank is believed to hold €8 billion in Greek debt, while the nationalised Hypo Real Estate holds €7.4 billion. These publicly-held banks are due repayment of €1.2 billion by Greece in 2014.
German president Christian Wulff urged banks to accept a burden-sharing deal.“The readiness for solidarity and co-operation will drop,” he warned, “if the citizens get the impression that the burden is distributed unevenly.”
German chancellor Angela Merkel was more direct, warning bankers yesterday: “If you want to be able to continue working in stable countries, then lend us a hand and do so with at least a modicum of goodwill.”