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German investors 'could sue Greece'
Photo: DPA

German investors 'could sue Greece'

Published: 10 Mar 2012 09:07 GMT+01:00
Updated: 10 Mar 2012 09:07 GMT+01:00

The German association of small investors SdK said it was considering legal action against Greece after Athens activated clauses to force creditors to accept an unprecedented debt swap.

The swap, which was taken up by 83.5 percent of Greece's private creditors on Friday, was needed for the release of a €130 billion, second aid package from eurozone partners for Athens to help it avert a default.

"The Greek debt exchange offer is interesting on a financial level, even for small debt holders," an SdK statement released late Friday acknowledged. "But its technical application is totally unacceptable for small investors," it added.

"The Greek government's project ... to force Greek bond holders to take

part in this partial default via collective action clauses violates fundamental legal principles," the statement said.

SdK head: fatal signal to investors

It quoted SdK director Daniel Bauer as criticising a "fatal signal to all investors" that would make "Europe a banana republic."

SdK said it was studying legal means at its disposition, and foresaw a "judicial process that lasts several years and certainly ends before the European Court of Justice."

Greece has triggered collective action clauses to force holdouts to accept bond swap aimed at erasing more than €100 billion ($132 billion) in debt and unlock a new bailout, a government source said Friday.

The decision was taken after Greece agreed with its eurozone partners that the move was the best way to ensure maximum participation in the deal.

Private creditors are to take losses of more than 50 percent on their holdings of Greek sovereign debt under the swap.

AFP/jlb

The Local (news@thelocal.de)

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Your comments about this article

16:18 March 10, 2012 by derExDeutsche
Investors and Taxpayers will pay for the debt created by deceptive EU credit ratings, with which Germany will take ownership of Greece. You pay the lease, Fatherland gets the Condo in Athens. Investors won't see a penny, in fact, the bill is still just growing.
22:08 March 10, 2012 by Deutschguy
Oh, please!

These bondholders will get a portion of their money, just like any creditor in any bankruptcy, but over a longer period of time.

Maybe these bondholders should have done their due diligence before making an investment. However, I suspect many of these of johnny-come-lateleys, who saw the write-down as inevitable and bought them then.

Nevertheless, these creditors don't deserve any more than others who bought bonds.
13:36 March 17, 2012 by kewlo
Many of these bondholders are older people who will not live to see even part of their savings reimbursed by the defaulted Greek government. Many bought Greek bonds at a time when a national default was considered impossible in the Eurozone.

And in many cases, Greece has treaties with other countries (including Germany) that specifically exclude losses by private persons investing in Greek bonds. Such treaties have been ignored by Greece and Germany, and now must be brought into memory by legal suits. Some politicians can only be convinced to do the right thing by force.

Who negotiated with small-time private investors? Nobody. They were simply kicked out. And who is now supposed to but Portuguese, Irish, Spanish, Italian bonds? What fools would do that?
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