Greece may seek Spanish-style rescue of banks as part of debt crisis solution

 

Athens

Greece could return cap-in-hand to its European partners for a Spanish-style rescue of its ailing banking sector despite receiving billions of euros in bailout loans.

A Greek government source said the country was looking for ways to lessen its burden as it attempts to put its economy back on course, including another writedown in the value of its debt or a "strong recapitalisation of its banks".

The country remains mired in a deep recession, and will have contracted by 25 per cent by time the recession ends, the Greek finance minister, Yannis Stournaras, said last week.

Yesterday, the source told The Independent that Athens, which has already made sharp reductions in spending, was willing to introduce another round of spending cuts – but only as long as Europe gave something in return. "Greece will keep its pledge and implement the measures but on the condition that it comes as part of a European solution to our debt crisis… This can involve different scenarios," the source said, suggesting that the country could seek the kind of sector-specific rescue package recently secured by Spain, with Europe pledging up to €100bn (£80bn) to prop up Madrid's banks.

The news came after the conservative Prime Minister, Antonis Samaras, agreed on the basic points of a new austerity package with the chiefs of socialist PASOK and smaller Democratic Left. The left-wing leader Fotis Kouvelis and socialist Evangelos Venizelos said that the recession-hit country should be allowed more time to implement its structural reforms and painful pension and wage cuts.

Europe has so far overruled any write down of Greek debt that would involve governments or the ECB. The country's lenders have already provided more than €200bn-worth of loans, while investors have suffered losses on the value of their bonds in February's debt-swap deal.

Earlier this week, the IMF Managing Director Christine Lagarde said Greek debt "will have to be addressed" – which was interpreted by many to mean that Athens would have to once again restructure its debt, an idea that Europe vehemently dismisses so far.

After the party leaders' meeting yesterday, the Finance Minister, Yannis Stournaras, said the agreement of party leaders had given him the "basis for a strong negotiation" with the "troika" of the IMF, the European Central Bank and the European Commission. Talks are expected to resume on Monday.

Suggested Topics
Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
ebooks
ebooksA special investigation by Andy McSmith
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Tradewind Recruitment: KS2 Teacher

Negotiable: Tradewind Recruitment: My client is a two form entry primary schoo...

Tradewind Recruitment: English Teacher

Negotiable: Tradewind Recruitment: My client is an excellent, large partially ...

Tradewind Recruitment: Science Teacher

£90 - £140 per day: Tradewind Recruitment: I am currently working in partnersh...

Tradewind Recruitment: Year 3 Primary Teacher

£100 - £150 per day: Tradewind Recruitment: Year 3 Teacher Birmingham Jan 2015...

Day In a Page

Isis hostage crisis: The prisoner swap has only one purpose for the militants - recognition its Islamic State exists and that foreign nations acknowledge its power

Isis hostage crisis

The prisoner swap has only one purpose for the militants - recognition its Islamic State exists and that foreign nations acknowledge its power, says Robert Fisk
Missing salvage expert who found $50m of sunken treasure before disappearing, tracked down at last

The runaway buccaneers and the ship full of gold

Salvage expert Tommy Thompson found sunken treasure worth millions. Then he vanished... until now
Homeless Veterans appeal: ‘If you’re hard on the world you are hard on yourself’

Homeless Veterans appeal: ‘If you’re hard on the world you are hard on yourself’

Maverick artist Grayson Perry backs our campaign
Assisted Dying Bill: I want to be able to decide about my own death - I want to have control of my life

Assisted Dying Bill: 'I want control of my life'

This week the Assisted Dying Bill is debated in the Lords. Virginia Ironside, who has already made plans for her own self-deliverance, argues that it's time we allowed people a humane, compassionate death
Move over, kale - cabbage is the new rising star

Cabbage is king again

Sophie Morris banishes thoughts of soggy school dinners and turns over a new leaf
11 best winter skin treats

Give your moisturiser a helping hand: 11 best winter skin treats

Get an extra boost of nourishment from one of these hard-working products
Paul Scholes column: The more Jose Mourinho attempts to influence match officials, the more they are likely to ignore him

Paul Scholes column

The more Jose Mourinho attempts to influence match officials, the more they are likely to ignore him
Frank Warren column: No cigar, but pots of money: here come the Cubans

Frank Warren's Ringside

No cigar, but pots of money: here come the Cubans
Isis hostage crisis: Militant group stands strong as its numerous enemies fail to find a common plan to defeat it

Isis stands strong as its numerous enemies fail to find a common plan to defeat it

The jihadis are being squeezed militarily and economically, but there is no sign of an implosion, says Patrick Cockburn
Virtual reality thrusts viewers into the frontline of global events - and puts film-goers at the heart of the action

Virtual reality: Seeing is believing

Virtual reality thrusts viewers into the frontline of global events - and puts film-goers at the heart of the action
Homeless Veterans appeal: MP says Coalition ‘not doing enough’

Homeless Veterans appeal

MP says Coalition ‘not doing enough’ to help
Larry David, Steve Coogan and other comedians share stories of depression in new documentary

Comedians share stories of depression

The director of the new documentary, Kevin Pollak, tells Jessica Barrett how he got them to talk
Has The Archers lost the plot with it's spicy storylines?

Has The Archers lost the plot?

A growing number of listeners are voicing their discontent over the rural soap's spicy storylines; so loudly that even the BBC's director-general seems worried, says Simon Kelner
English Heritage adds 14 post-war office buildings to its protected lists

14 office buildings added to protected lists

Christopher Beanland explores the underrated appeal of these palaces of pen-pushing
Human skull discovery in Israel proves humans lived side-by-side with Neanderthals

Human skull discovery in Israel proves humans lived side-by-side with Neanderthals

Scientists unearthed the cranial fragments from Manot Cave in West Galilee