German 'bad bank' seeks to help Greece

2nd September 2011, Comments 0 comments

The "bad bank" of German state-owned lender Hypo Real Estate said on Friday it would swap nearly one billion euros ($1.43 billion) of Greek bonds for longer-dated paper to help debt-crippled Greece.

The bank has agreed to swap some 13 bonds, with an overall value of 975 million euros and maturity date of 2020, for bonds expiring at a later date.

"We expect these measures to have a stabilising effect and want to make a contribution," said Christian Bluhm, Chief Risk Officer of the bad bank.

He added that the move increased the prospect of the bank, which manages HRE's toxic assets, being paid for its remaining portfolio of Greek debt, amounting to more than seven billion euros in total.

The bank is the biggest holder of Greek debt among German financial institutions.

According to media reports, several German banks, including certain regional banks, known as Landesbanken, have been reluctant to respond to political appeals to help Greece.

In June, Finance Minister Wolfgang Schaeuble announced that German banks would contribute 3.2 billion euros to the Greek rescue package, notably by voluntary debt swaps such as that announced Friday by HRE.

One month later, EU leaders clinched a deal on a new rescue package for Greece. No new figure for the contribution of German banks has yet been released.

© 2011 AFP

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