Δολοφονία Καρολάιν

Dalara and bankers in Athens for the PSI

Νταλάρα και  τραπεζίτες στην Αθήνα για το PSI

Athens finds itself at the heart of the European banking sector today...

Athens finds itself at the heart of the European banking sector today, with representatives of major European banks and Charles Dalaras of the IIF having the first substantive meeting on the conditions of PSI implementation for the haircut of Greek government bonds by 50%.

The bankers, who after many negotiations were able to reach an agreement in the summer, albeit never applied, on a 21% haircut on Greek bonds, are extremely reluctant to voluntarily accept such a large decrease in their portfolio. Thus, they will try to achieve significant returns for their participation, such as high interest rates of about 7%-8% on new bonds.

The biggest thorn for Greek banks is finding the funds to cover the losses they will suffer from the haircut in order to avoid nationalization, which seems inevitable at this point. According to what EBA announced and confirmed last Friday, the Greek banks will meet their capital needs through the Financial Stability Fund, which will be reinforced for this purpose with the amount of 30 billion euros.

the success of PSI will be judged by participation, since in order to have a positive effect on reducing the debt, the percentage of bank participation will have to be at least 90% in order to reduce the debt of the state to about 65-70 billion euros. The new bonds will be based on English rather than Greek law, which can create additional obligations for the Greek government, i.e. enabling bondholders to demand collaterals in a potential restructuring of the debt.

Please note that the Greek government consultants for the PSI and haircut procedures are Lazard and the Cleary, Gottlieb, Steen and Hamilton law firm, based in New York. The scenarios the law firm has developed include a possible return of Greece to the drachma.

Unlike the american Cleary, Gottlieb, Steen and Hamilton, the European BNP Paribas, HSBC and Deutsche Bank which happen to hold Greek bonds in their portfolios and were hired as consultants for the July 21 PSI, were "fired" by Venizelos on the last day of the previous government under Papandreou.
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