[國際新聞] Europe wins over banks after 10-day push government, default, country, successful, finances

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Europe wins over banks after 10-day push

BRUSSELS — Europe's leaders hailed a successful end to 10-days of pressure on the bank lobby with what they termed a breakthrough deal Thursday that prevents lenders triggering Greek credit default insurance.

Greece reacted with measured relief to the deal that slashes the country's huge debt by nearly a third.

"The country has signed a very major deal, this is a historic day that can put order in our public finances," government spokesman Elias Mossialos told private Mega television.

But he also warned that "a lot is at stake in coming days," noting that Greece's intransigent opposition parties should help apply economic reforms and banks had to be persuaded to join the country's debt reduction scheme.

The deal brokered early on Thursday will cut 100 billion euros off Greece's 350-billion-euro debt mountain thanks to an agreement between the eurozone and a banking lobby for banks to take 50 per cent losses on Greek debt.

The deal with the banks in which they accept a "haircut" on their Greek loans should help cut the ratio of Greece's debt to gross domestic product (GDP) from 160 per cent to 120 per cent by 2020, a final eurozone statement said.

"Haircut deal brings relief but also obligations," top-selling Ta Nea daily headlined on Thursday, noting that Greece had agreed to "painful" pledges including "multi-year austerity, a more intensive supervision and a wide privatisation program."

"It will be a new start for us. But the work must continue," Prime Minister George Papandreou told reporters after a marathon summit in Brussels.

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"We have escaped the trap of default," he said, adding that it was a "question of survival" for his country.


European leaders, who had originally hoped to clinch the grand bargain at a summit on October 17, finally closed the deal at around 3:00 a.m. local time.


After one cancelled summit, a frantic weekend of preparations involving finance and foreign ministers, and four emergency EU and eurozone summits, carefully orchestrated arm-twisting saw the Institute of International Finance (IIF), representing the banks, finally sign up to one magic word.


"Voluntary," said eurozone chief Jean-Claude Juncker — who started and finished the 10-day campaign in tough negotiations with IIF negotiator Charles Dallara.


"The bankers understood," Juncker said, after several meetings last week alongside EU President Herman Van Rompuy, and a final dramatic sit-down with German Chancellor Angela Merkel, French President Nicolas Sarkozy and IMF managing director Christine Lagarde.


The crucial face-to-face, which Sarkozy warned would take place during a now-infamous off-the-record briefing on Sunday, lasted just 45 minutes.


The bankers realized the EU had "resolved not to envisage a default for Greece, had the bankers not been ready to do the deal they now have," Juncker said on his way out.


Eurozone states will mobilize 30 billion euros in guarantees for those parts of the Greek debt not written off in Brussels, as well as "a new 100-billion-euro" bailout.


Also agreed in a four-point package of measures was an agreement for banks to beef up their capital buffers to absorb losses on Greek bonds, as well as pledges to tighten economic governance and fiscal discipline.


In July, the eurozone offered Greece a second bailout and also agreed that banks would take a 21-per cent loss on their bond holdings. But the economic situation deteriorated rapidly.


Dallara had said in a statement mid-negotiation that there was "no agreement on any element of a deal."

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Leaders also agreed a 106-billion-euro bank recapitalization, "that wasn't watered down, it now has been agreed," British Prime Minister David Cameron said.


In a summit statement, EU leaders said measures to restore confidence in Europe's banks "are urgently needed and are necessary in the context of strengthening prudential control of the EU banking sector."


They declared a "broad agreement" for banks to increase their core Tier 1 capital ratio to nine per cent of assets by June 30, 2012.


This is two percentage points higher and seven years earlier than under new international banking rules recently agreed in the Basel III regulators accord.


Banks must first try to raise funds through "private sources of capital, including through restructuring and conversion of debt to equity instruments."


Until the target is reached, the statement said, "banks should be subject to constraints regarding the distribution of dividends and bonus payments."


Governments should provide aid if necessary, the document says. But if such aid is impossible among eurozone nations, the bloc's bailout fund, the European Financial Stability Facility (EFSF), could provide the money.



Read more: http://www.vancouversun.com/busi ... .html#ixzz1bzh7z8uU

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Germany's Chancellor Angela Merkel holds a news conference at the end of a euro zone summit in Brussels, October 27, 2011. Euro zone leaders said on Thursday they had reached agreement on a comprehensive package of measures to tackle the euro zone's sovereign debt crisis.