Greek banks agree to crucial debt buyback | News | DW | 07.12.2012
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Greek banks agree to crucial debt buyback

Greece's five biggest banks said they would take part in the country's debt buyback, which expires on Friday, putting Athens on track to meet targets set by international lenders.

A European Union left and the Greek flag wave above the ancient Parthenon temple, at the Acropolis Hill, in Athens on Monday, July 11, 2011.Greece's Socialist government on Monday named a five-member committee to head a euro50 billion ($71.2 billion) privatization program aimed at easing the country's euro340 billion ($484.2 billion) national debt. (Foto:Petros Giannakouris/AP/dapd)

Griechenland letzter Platz Korruptionsindex

The buyback scheme, in which investors had to declare their interest by Dec. 7, is central to efforts by Greece's eurozone and International Monetary Fund lenders to cut its debt to manageable levels and unlock much needed aid for the country.

The country's biggest lenders - National Bank, Alpha, Eurobank, Piraeus bank, and Hellenic Postbank - each said they had approval to participate, but did not specify how much of their sovereign debt holding they would tender.

The smaller Attica Bank also said it would take part.

The National Bank of Greece's announcement came hours before the 5 p.m. GMT deadline for private sector bondholders to join the scheme, under which they would sell back their devalued debt holdings to the government. A Greek official said Athens would not make any announcement until Monday on the interest it had received.

Under the scheme, Athens aims to spend 10 billion euros ($13 billion) of borrowed money to buy back bonds far below their nominal value in a bid to cut debt by a net 20 billion euros.

Sources said earlier that the banks had asked their boards to approve selling back as much as their entire holdings. Smaller Attica bank's board also approved participation.

The buyback is the latest in three years of eurozone efforts to resolve Greece's problems. The economy has shrunk by 20 percent in the last five years and unemployment has hit a record 26.2 percent, pushing public anger to new highs.

Athens has pressured its banks, which hold an estimated 17 billion euros ($22 billion) out of the 63 billion euros in eligible bonds, to sell and they had been expected to do so as they depend on bailout funds that a successful buyback would unlock.

Analysts said the better-than-expected terms announced by Athens earlier this week would draw enough foreign investors as well, ensuring success.

bk/jlw (Reuters/AP)

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