Private sector won't stump up more for Greece: German banks

28th September 2011, Comments 0 comments

The private sector in Germany is opposed to shouldering an even bigger share of the Greek bailout as some have suggested, German banking federation chief Andreas Schmitz said Wednesday.

"I have no understanding for such a debate at this juncture," Schmitz told the mass-circulation daily Bild in a pre-release of an interview to be published on Thursday.

"The crisis can only be overcome if we succeed in restoring people's confidence in politicians," Schmitz said when asked about proposals for greater public-sector involvement in the Greek rescue package.

"If governments now unravel the deal that was reached on private-sector involvement, then the loss in confidence for the financial markets would more than negate the benefits of any such action," the banking chief argued.

Private-sector involvement (PSI) is a key part of a second bailout package agreed by European leaders and private creditors on July 21 and awaiting ratification by the 17 eurozone member nations.

Under the PSI bond restructuring agreement, Greece's private bank creditors would accept a deferment and a 21 percent "haircut" or reduction in value of the debt they hold, to lower Athens's repayment burden.

But Greece's continued trouble has led to speculation that a 50-percent 'orderly' haircut -- meaning with the consent of creditors -- will now be required to make a difference.

© 2011 AFP

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