October 23, 2011 in Nation/World

EU summit aims at recapitalization plan

Kate Gibson MarketWatch
 

European Union finance ministers reportedly sketched a deal on Saturday for recapitalizing European banks, as Germany and France tried to settle their differences over containing euro-area debt.

That came ahead of a Saturday night meeting between German Chancellor Angela Merkel and French President Nicolas Sarkozy in an effort to resolve their differences over how to increase the European Union’s rescue fund to contain the debt crisis.

The Sarkozy-Merkel meeting was on the eve of today’s scheduled EU summit, now split into two sessions, one today and the other before Wednesday.

The debate between Germany and France forced European leaders to schedule a second session after it appeared no decision would be forthcoming today.

On Saturday, a European official reportedly said the EU was closing in on an agreement that would make banks ante up just over $140 billion to safeguard them against additional losses on Greek bonds.

However, a top bank lobbyist on Saturday said an agreement to reduce Greece’s debt is not close, countering claims by euro-area finance ministers that they would request banks take larger losses on Greek bonds, according to the Associated Press.

“We’re nowhere near a deal,” Charles Dallara, managing director of the Institute of International Finance, said in an interview with the AP in Brussels, where 27 European Union finance ministers were meeting.

While the finance ministers have not specified the amount of how much they were looking to reduce Greece’s debt, a report from Greece’s international debt inspectors suggested the figure might need to be as high as 60 percent to get the country positioned to repay its debt.


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