Agreement closer on Greek collateral

HS sources: only one model remains

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The dispute over the collateral that Finland wants Greece to provide for the Finnish share of EU guarantees for the country’s bailout loans could be resolved soon. Helsingin Sanomat has learned that the options for guarantees have been assessed and only one model remains on the table.
      According to Helsingin Sanomat sources, the model would be based on one of the options that experts have been discussing for a while.
      There has been public speculation that lenders would get collateral in the form of shares of Greek banks.
     
The collateral issue is likely to be on the agenda when Finnish Prime Minister Jyrki Katainen (Nat. Coalition Party) meets with German Chancellor Angela Merkel in Berlin on Tuesday.
      Germany has previously come out against the collateral agreement reached between Finland and Greece.
      “The view of the German government is that different countries cannot have separate agreements at the expense of others, and without the approval of all. This is why Greece withdrew from its agreement with Finland”, said Merkel’s spokesman Steffen Seibert in Berlin on Monday.
     
If agreement is reached on the collateral issue, the solution will contain a legal loophole which will allow Greece’s previous creditors the possibility to challenge the collateral in court.
      This is because the investors’ contracts state that new lenders cannot be given terms that are more advantageous than those that the old lenders got.
     
Merkel and European Commission President José Manuel Barroso insisted after meeting in Berlin on Monday that the next emergency aid package to Greece needs to be ready by early October.
      The message from the two was intended for those euro countries whose parliaments are voting on participation in the package. For instance, the Finnish and German parliaments are to vote in late September. The Finnish government has seen getting the guarantees as a condition for new support.
     
Renewed fears that Greece may end up defaulting on its loans brought another negative reaction on European stock exchanges on Monday, with the prices of shares of Europe’s largest listed companies falling an average of 2.5 per cent in the day’s trading. The last time that the share prices of Europe’s 600 largest listed companies were this low was in July 2009.
      The decline on the stock markets came after Friday’s trading, in which share prices were between three and four per cent lower than on Thursday. Adding to market nervousness were rumours that Germany is preparing to support its banks in case of Greek debt restructuring.
      The market values of Europe’s 600 largest corporations have declined by about 25 per cent from the peak value in mid-February. Leading the decline on Monday were banks, whose shares fell 4.6 per cent, and insurance companies, whose value went down by 4.4 per cent.
     
The biggest losers in Monday’s trading were the large French banks with the greatest amount of outstanding loans in Greece. Their value fell about ten per cent. Large German banks, such as Deutsche Bank and Commerzbank, lost about seven per cent of their value.
      Nordea, the largest bank in the Nordic Countries, fell by nearly six per cent.


Previously in HS International Edition:
  Van Rompuy in Helsinki: Decision on funding Greece to be reached soon (6.9.2011)
  Germany “taken by surprise” by collateral deal (30.8.2011)
  Finland and Greece agree on bailout terms (17.8.2011)
  FM Tuomioja says Finland deserves gratitude for actions in euro crisis (5.9.2011)
  Finland could get Greek bank shares as collateral (31.8.2011)

Helsingin Sanomat