Dutch minister knocks voluntary bank aid for Greece

7th July 2011, Comments 0 comments

Dutch Finance Minister Jan Kees de Jager said on Thursday that a voluntary contribution by private banks to a Greek bailout package was not realistic, and played down the effects of any fallout on the bond market.

"I think we have to accept that a voluntary contribution is not realistic," he told the Dutch financial daily Financieele Dagblad in an interview.

"If a compulsory contribution gives rise to a short and isolated rating event, then it's not so bad because Greece is now not on the market and won't be for the time being," he said, referring to the government debt market and using a term which refers to a default rating.

He said: "I am not too afraid of a downgrade of the credit rating of Greece."

De Jager's spokesman Niels Redeker told AFP: "We have always insisted that there should be a substantial contribution by private banks in the Greek rescue plan."

He said that the exact nature of the contribution still needed to be decided in coming days.

De Jager's comments come after eurozone finance ministers agreed to release the fifth slice of funding for Greece under a first rescue agreed in May last year.

But the Standard&Poor's warned that outline proposals for a second rescue, involving private banks voluntarily shouldering some of the cost, would amount to a selective default.

Then Moody's rating agency severely downgraded Portuguese debt, warning that Portugal may also need a second rescue and implying that this could be conditional on banks participating.

On Wednesday senior figures in the European Union hit back hard at the agencies, saying that their judgements were misplaced, lacked credibility and could bring about what they were forecasting.

The eurozone is scrambling to craft a plan in which banks, insurers and pension funds would agree to roll over their Greek debt in a way not considered to be a default by the credit ratings agencies.

Both the Netherlands and Germany have pushed for substantial contributions by the private sector.

© 2011 AFP

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