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Merkel tells bankers to help bailout Greece

The Local · 29 Jun 2011, 16:34

Published: 29 Jun 2011 16:34 GMT+02:00

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"If you want to be able to continue working in stable countries, then lend us a hand and do so with a modicum of goodwill," Merkel said in a speech to bankers and members of her conservative Christian Democrats at a conference in Berlin.

Merkel called the Greek parliamentary vote on Wednesday approving emergency austerity measures "really good news" that would help pave the way for a massive bailout by the European Union and the International Monetary Fund.

Amid angry street protests, Greek MPs voted in favour of €28.4 billion ($40 billion) in spending cuts by 2015, unlocking €12 billion in emergency aid. The funds represent the fifth tranche of a €110-billion package agreed last year with the EU and the IMF, and are needed to prevent Greece defaulting on its mammoth debts.

Such a default could have grave consequences not only for the 17-nation eurozone and for the global financial system.

The head of Germany's largest bank, Deutsche Bank CEO Josef Ackermann, told the meeting the banking community was working "around the clock to find a solution" to the Greek crisis.

Speaking of talks beginning Thursday between Germany's leading banks and Finance Minister Wolfgang Schäuble, Ackermann said the bankers "will make an offer" of help, "not because it pleases us, but in order to avoid the nuclear meltdown" which would otherwise overwhelm all eurozone economies.

But such aid will cost German financial institutions dearly, he added.

"This will cost substantial amounts, depending on the plan that is chosen, we'll discuss that tomorrow," Ackermann said.

The banker said German financial exposure to Greece stood at about €20 billion, adding that financial institutions might have to depreciate the assets by 45 percent if they were to roll-over loans to Greece to assist in a second rescue package.

"It looks nice and simple to roll-over (credit), but this creates a new category of funds" that we shall have to carry, Ackermann said. "You can't just pretend it's the same thing," he added.

Earlier Berlin signalled support for a French plan to involve private lenders in a new rescue for Greece with deputy finance minister Jörg Asmussen describing the plan as a "good foundation for discussion."

Story continues below…

A spokesman for the German Federation of Private Banks (BdB) told news agency AFP that the French plan was "the most detailed currently on the table", but that discussions were continuing on how it might be implemented.

President Nicolas Sarkozy announced Monday that France was working on a 30-year scheme to give Greece time to get on top of its debt mountain, which is now worth more than a year-and-a-half of the country's total output.

"We have concluded that prolonging loans over 30 years, and putting them on the level of European loans indexed on Greek growth, would be a system that all countries might find useful," Sarkozy told a news conference.

AFP/DAPD/The Local/mry

The Local (news@thelocal.de)

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Your comments about this article

17:54 June 29, 2011 by Englishted
Isn't the headline wrong?

I thought she was going to ask the bankers not tell them .

But it still won't work, in the end the workers of Europe will pay as always by taxes or some other way.

The bankers will just collect high wages and bonuses as normal.
18:59 June 29, 2011 by MJMH
Why is Europe still pretending. Let the EU and the euro die, oh wait, isn't that what's happening right now. Even the excuse that the union helps protect the countries from the growing strength of China or that it gives Europe a voice in the world because of the emergence of India and Brazil is getting pretty lame. What is the point of a united Europe anymore.
19:49 June 29, 2011 by Nemo2010
Yes, the headline is wrong. It should read "bail out," not "bailout."

Either way, the bailout is merely electronic. There is no real substance to it. What is happening is German companies are buying Greek companies at fire sale prices. A very clever ploy.
20:31 June 29, 2011 by mashlakhito
Every euro put in to "helping" Greece is totally lost. It's more than obvious that these bail outs are helping the French and German banks which are heavily exposed to Greek debt to give them more than sufficient time to build up their capital and then write down all the debt that they are exposed to and still be in a good enough shape afterwards. All the European governments which provide money to bail out Greece should thank and reward their citizens with bonuses as a thank you for wasting all their money rather than investing their hard-earned money for their future (pension).
22:15 June 29, 2011 by jg.
Not long ago, a number of banks managed to get themselves into deep water by putting other people's money into investments which offered improbable rates of return but where there was a high risk that they would not get the money back (apparently, they did not understand the last part). Having told these banks never to do anything so stupid again, they are now being invited to invest in Greek bonds, offering really high interest rates but where there is a substantial prospect of not seeing all the money repaid (or the interest). I really hope my bank retains some common sense and politely tells Angela where to go.

Instead, I suggest that the pension funds of all EU staff should be invested in Greek bonds.
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