Greece sees possibility of 50 percent haircut on debt: reports
Greece's finance minister has told lawmakers he sees three scenarios to resolve the debt crisis, including one involving an orderly default with a 50 percent haircut for bondholders, two Greek newspapers reported on Friday.
A government spokesman dismissed the reports, which said the other scenarios would be a disorderly default or the implementation of a second, 109 billion euro ($146 billion) bailout plan agreed between Greece and its lenders on July 21.
Newspaper Ta Nea, citing a person who heard a speech by Finance Minister Evangelos Venizelos to ruling Socialist party lawmakers, quoted him as saying it would be dangerous to request the 50 percent haircut.
He also said: This would require an agreed and coordinated effort by many, the paper reported.
A finance ministry spokeswoman said she could not comment on the reports, but deputy government spokesman Angelos Tolkas said the government would stick to the bailout plan agreed between Greece and its lenders two months ago.
What we are choosing is (for Greece) to stay in the heart of Europe by implementing the July 21 decisions, he said. The big challenge is to avoid any default or collapse.
Two Socialist deputies who said they were present at the speech in which Venizelos tried to rally support among the ruling party for a new wave of austerity measures, denied that he had floated the 50 percent haircut scenario.
I categorically deny it. There is no such scenario, lawmaker Theodora Tzakri told Reuters.
Venizelos is traveling to Washington for a weekend meeting with inspectors from Greece's lenders, the International Monetary Fund and the European Union.
The reports came as Moody's Investors Service cut the credit ratings of eight Greek banks. It cited a struggling domestic economy and falling deposits among reasons for the move, which markets had expected.
Moody's said the outlooks for all the ratings remained negative. The downgrade concluded a review begun on July 25.
Some European banks in July agreed to contribute to a rescue plan for Greece by taking a 21 percent loss on bonds maturing before 2020.
The deal, which involves banks swapping debt for longer maturity bonds of 15 or 30 years, prompted banks to take a loss on their bonds in second-quarter results.
The European sovereign debt crisis has kept banks hostage to market worries about their capital strength and access to funding.
Earlier this month, Deutsche Bank
($1 = 0.743 Euros)
(Reporting by Angeliki Koutantou; Writing by Michael Winfrey; Editing by Kim Coghill)
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