Finance ministers, ECB disagree on Greek restructuring: report

Several euro zone finance ministers told ECB President Jean-Claude Trichet in a conference call last week they have doubts Greece will meet its fiscal targets and suggested Athens restructure its debt, a magazine reported on Saturday.

According to Der Spiegel magazine, several of the finance ministers said Athens would be unable to meet its fiscal targets and return to the markets for funding next year and asked if a debt restructuring for Greece would be sensible in view of the situation. But European Central Bank chief Trichet blocked the idea and said he was not willing to discuss it, Der Spiegel said.

The report, to appear on Monday, said Trichet feared that a restructuring could damage confidence in the entire euro zone and could hit banks holding Greek debt hard.

German Finance Minister Wolfgang Schaeuble viewed Trichet's concerns about capital markets to be exaggerated and not credible, Der Spiegel said.

Participating in the conference call with Trichet were key euro zone finance ministers as well as European Union Economic and Monetary Affairs Commissioner Oliver Rehn.

Der Spiegel said Rehn had told the EU Commission last week that any idea of a Greek restructuring, if it were to be required, should not be discussed in public but would simply happen at some point.

Public debate on a restructuring has been almost taboo since Athens accepted a 110 billion euro ($157 billion) bailout from the EU and International Monetary Fund nearly a year ago, and opposition to the idea remains high across the zone.

The Greek government has repeatedly ruled it out and the ECB also opposes it.

But privately, some senior euro zone government officials are acknowledging for the first time what private economists have been saying for months -- that some form of restructuring may have to happen sooner, probably in 2012.

Aid under Greece's three-year rescue package is due to flow until June 2013, but to emerge safely from its bailout, the government will have to demonstrate before then that it can tap the capital markets for long-term funding.

Athens has said it would like to resume selling longer-maturity paper later this year, or in 2012 at the latest.

Euro zone officials have shied away from discussing a Greek restructuring publicly for fear of panicking the markets. But it is now a year-and-a-half since the Greek debt crisis erupted, giving banks plenty of time to prepare for such an eventuality.

(Writing by Erik Kirschbaum; editing by Susan Fenton)