Greek newspapers expressed fears Monday for the future of the country’s banking sector if debt writedowns of 50 percent proposed by European leaders went ahead.
“Major haircut – we are playing with fire” cautioned the pro-government daily Ta Nea.
A haircut of 60 percent “would sustain Greek debt”, currently standing at 350 billion euros, but there was, according to the paper, “still the risk of both a default and that banks would be kept out of the market due to a lack of financing”.
Naftemporiki, a financial daily, wrote that “banks are prepared to accept a 40 percent haircut” but feared “repercussions for pension funds”, citing a Greek government source.
According to the paper’s source, “pension losses would be covered by reduced debt repayments” obtained from wiping out Greece’s debt.
The left-wing Eleftherotypia newspaper said it feared that the effective nationalisation of banks which resorted to funding from the European Financial Stability Facility, a fund to prevent debt contagion, would amount to putting them outside supervision.
The National Bank of Greece (BNG) and the small Attica Bank, which manages pension funds for engineers, would be particularly affected, Eleftherotypia wrote.
“Losses from pension funds will lead to tutelage for the BNG”, the paper wrote.
“Nightmare haircut, a bomb for pension funds, bank nationalisation”, fumed right-wing Eleftheros Typos.
Greek pension funds hold around eight billion euros in sovereign debt bonds and banks around 44 billion euros.
(source: AFP)
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