Deutsche Bank boss voices cautious support for Greek debt
Deutsche Bank chairman Josef Ackermann said Thursday he did not expect investors to suffer losses on Greek debt but added that his bank had nonetheless taken preventive measures.
"I do not believe there will be a 'haircut' on Greek debt," Ackermann told a general assembly of shareholders in the biggest private German bank in Frankfurt.
A "haircut" is a reduction in the amount of debt paid back to creditors and many analysts expect that to happen if Greece is unable to manage its roughly 340 billion euros ($480 billion) in public debt.
At the end of 2010, Deutsche Bank held Greek sovereign bonds worth 1.6 billion euros, but it has already accounted for the possibility of their being worth much less in its accounts, Ackermann said.
He did not say by how much their value had been reduced, but financial markets have mooted cuts of up to 50-60 percent for Greek debt in general.
Ackermann's comments came after German Finance Minister Wolfgang Schaeuble edged towards the European Central Bank's hard line position on restructuring Greek debt, in an interview with the German business daily Handelsblatt.
Schaeuble warned that the fallout from making changes to how and when the debt is repaid "would be far too severe at this point," and might be "even more dramatic than the collapse of Lehman Brothers."
The US investment bank's failure in September 2008 marked a new phase in the global financial and economic crisis.
A note by the Fitch ratings agency last week put the exposure of all German banks to Greece at around 10 billion euros.
German political leaders had been considering support for some changes to details of debt repayment, but the ECB has warned it would have catastrophic effects on Greek banks and fuel fears about the situation in other eurozone countries.
© 2011 AFP