Germany looks to private sector for Greek bailout
Opposition politicians insist taxpayers' money is not used to rescue foreign state
Published 01/05/2010 | 05:00
GERMANY'S top banker, Josef Ackermann, has been asked to orchestrate a private sector contribution to the Greek bailout.
The chief of Deutsche Bank has been asked by Wolfgang Schauble, the German Finance Minister, to co-ordinate a response after complaints by German opposition politicians that banks and bond holders were not sharing the pain of a Greek rescue with taxpayers.
Eurozone governments were yesterday waiting for a signal from Athens that a deal had been completed between the Greek government, the European Central Bank (ECB) and the International Monetary Fund that would unlock up to €120bn of rescue finance.
Greece must redeem €8.5bn of government bonds by May 19, but a loss of confidence in its ability to pay has left it shut out of the bond markets.
Pressure continued to mount on Greece yesterday when Moody's, a leading debt-rating agency, downgraded nine of its banks, including National Bank of Greece, because of their "weakening stand-alone strength" due to challenging economic prospects, low business growth and increased loan quality problems.
Increasing discontent over the role of rating agencies in Greece's troubles came to a head yesterday when a board member of the ECB said that Standard & Poor's (S&P) had been too quick to downgrade the country's credit rating to "junk" on Tuesday.
Ewald Nowotny, the governor of Austria's central bank, said that it was "very problematic that S&P changed its ratings for Greece while negotiations about the measures were still going on".
Talks continued yesterday in Athens over the details of an austerity package -- a promise to implement a new budget of spending reductions and tax increases aimed at cutting €24bn from Greece's deficit.
The deal is expected to be announced this weekend by Greek Prime Minister George Papandreou. A meeting of the eurozone finance ministers will be held in Brussels tomorrow. Luxembourg's Jean-Claude Juncker, head of the finance ministers, described the session as "an extraordinary meeting".
The acceptance of the austerity package by the ministers will trigger national action, most notably a bill in the German parliament to authorise the rescue loans.
Germany, the biggest contributor to the eurozone rescue package, has been a stumbling block because of public opposition to the use of taxpayers' money to rescue a foreign government.
Germany's Socialists, the main opposition party to Angela Merkel's coalition, called for banks to share the pain of a rescue this week and urged the government to work towards a financial market tax or levy on the banks across Europe. (© The Times, London)