Germany’s biggest banks are looking at a rescue plan for Greece under which they would buy Greek debt backed by financial guarantees from Berlin, the Financial Times has learnt.
As Josef Ackermann, chief executive of Deutsche Bank, held talks in Athens on Friday with George Papandreou, Greek prime minister, the structure of a possible eurozone bail-out should the country’s debt crisis worsen began to emerge.
One senior German bank official said serious thought was being given to a plan for the German government, working through KfW, its development bank, to issue guarantees to banks that bought Greek debt.
Several such banks, including Hypo Real Estate, Eurohypo and Deutsche Postbank, which hold billions of euros of Greek debt, all said they would not increase their holdings. However, guarantees from Berlin for what could be high-yielding debt might soften their stance.
The official said: “This could be one of the outcomes but it would not be a purely private solution – there has to be government involvement. If it were something on a eurozone level, I don’t think my bank would say: ‘We would not take part.’”
At the end of a week in which a general strike brought much of the country to a standstill, Mr Papandreou prepared the way for more radical measures to cut the spiralling deficit. He urged the rest of Europe to show “solidarity”. “We must do whatever we can now to address the immediate dangers today. Tomorrow it will be too late, and the consequences will be much more dire,” he told parliament.
Mr Papandreou said Greece did not want other countries to pay its public debt but he expected a strong show of support from its European Union partners. Angela Merkel, Germany’s chancellor, is due to meet him next week.
The price of Greek bonds gyrated amid uncertainty over whether Athens would be able to borrow from the capital markets next week. Yields on government bonds rose sharply but slipped back on rising hopes for a deal to help Athens issue a five-year bond next week.
Berlin and German banks would be keen to involve other eurozone countries in such a plan, but officials in Berlin have said each country could find its own way to contribute.
Additional reporting by Gerrit Wiesmann in Frankfurt, Joshua Chaffin in Brussels and David Oakley in London