Greek Banks List Conditions Under Which They Will Agree To Be Bailed Out

Tyler Durden's picture

One of the indirect beneficiaries of the German generosity which allowed a token EUR44 billion to be released for Greece, with the bulk of the proceeds used to pay off hedge fund and Western Europe bank creditors, are Greek banks, who will fight for the remaining scraps and use them to plug their massively underwater balance sheets. However, as we reported yesterday, the same Greek banks not only want their cake, but they now have a set of conditions that must be met for them to eat it too.

Because recall that remarking GGB2s from par (where Greek banks certainly have the bulk of the post-reorg impaired debt market) to the debt buyback price will cause massive hits to Greek bank capitalization which explains the tumble in Greek bank stocks in the past few days. As such, said Greek bankers are threatening to scuttle the "voluntary" aspect of the Greek bailout as explained yesterday, unless the Greek government agrees to a set of conditions that will allow them to continue operating even after the forced remarking of Greek debt to post-Greek bailout #3 market.

Imerisia, via Bloomberg, reports these conditions:

  • Greek banks at a meeting with Finance Minister Yannis Stournaras late yesterday agreed to participate in the country’s debt buyback plan, Imerisia reports, without citing anyone.
  • In compensation, banks ask for full recognition of deferred tax assets in capital calculations, which would reduce capital needs by EU4bn
  • Stournaras to present request to troika while saying final decision will rest with EU competition commission
  • Following lender concerns, Stournaras also agreed to introduce legislation that give banks legal indemnity from potential shareholder lawsuits

Of course, reading other media, such as Kathimerini, one would be left with a far less optimistic view on the conclusion of the talks, which demands a Greek bank "voluntary" agreement to be crammed down, as otherwise CACs have to be enforced, and the entire third Greek bailout is in danger of being unravelled.

From Kathimerini:

Meeting between Stournaras and bankers hits stalemate


There was no progress in the Thursday meeting between Finance Minister Yannis Stournaras and the Hellenic Bank Association regarding the issues of the bond buyback plan and the sector’s recapitalization.


Neither Stournaras nor the association’s head, Giorgos Zannias, made any statements after the meeting. Kathimerini understands that the representatives of the credit sector expressed opposition to the buyback plan, stressing that it would lead to the loss of the banking system’s private character. That in turn would have serious implications for the economy itself and the rebound effort, as it would send a negative message to investors and the markets.


The association’s representatives suggested that bank stakeholders have already suffered huge losses as a result of the original debt haircut (PSI) earlier this year and that the buyback would constitute a disproportionate burden for them.


They went on to present two alternative proposals to the minister, which they argued would reach the target of reducing the country’s debt without the economic exhaustion of stakeholders: The first concerns swapping the Greek state bonds banks hold with European Financial Stability Facility (EFSF) bonds, either directly or through the Hellenic Financial Stability Fund (HFSF); the second is less drastic and provides for a partial participation in the buyback, with the government exempting the PSI losses from tax, which could lead to a benefit of about 3 billion euros for banks.


Stournaras is said to have reiterated the need for the buyback plan to succeed, and reminded bankers that such alternatives have already been rejected by the European Central Bank and the European Commission. However, he did say he would examine the tax proposal.

Of course, since in the end this is merely an exercise in perpetuating the failed Eurozone status quo at a modest incremental cost, expect everyone to fall into place, with an end cost borne out again by German and European taxpayers, with the marginal winners both Greek and European banks. As always. Expect this to continue until such time as Greece runs out of any and all lien-free assets, at which point there will be no wealth that can be "fresh started" by the global banking syndicate, and will then be set free.

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Middle_Finger_Market's picture

Let the banks fail and secure the wealth of the people. Greece is Europe. 

GetZeeGold's picture



Our demands......are fairly non-negotiable.

Zer0head's picture

If there was any doubt that Tom Keene has jumped the shark

Joe Weisenthal of Business Insider is his lead off guest this morning

Joe some advice, before going on air remove the marbles from your mouth

CrimsonAvenger's picture

Greek banks: In this monster fantasy clusterfuck, do you mind if we fudge this set of numbers a bit?

Everyone else: You're kidding, right?

Dick Darlington's picture

Here's an interesting article by BBG on the ECB-blessed ponzi scheme.

Banks Pledging More Hard-to-Trade Assets as ECB Loan Collateral


Nov. 30 (Bloomberg) -- Financial institutions are using more hard-to-trade assets such as loans and credit claims as security for European Central Bank funding.
Use of these assets jumped 60 percent to an average of 668.4 billion euros ($867 billion) in the third quarter of this year, from 418.7 billion euros in 2011, the ECB said on its website. These so-called non-marketable assets accounted for 27 percent of the 2.52 trillion euros of collateral posted, more than any other guarantee type.
The Frankfurt-based central bank broadened in February the types of credit claims that banks in seven countries of the euro region, including Spain, Italy and France, in a bid to reduce liquidity tensions amid the sovereign debt crisis.
The use of covered bonds, notes backed by mortgages or public-sector loan payments as well as the guarantee of the issuing bank, rose 70 percent to an average of 488.8 billion euros in the third quarter, the ECB data show. Government bonds accounted for 368.4 billion euros of loan collateral, up from 255 billion euros last year.

Values of the posted collateral are calculated after the ECB applies discounts, or haircuts, the central bank said.

Middle_Finger_Market's picture

Soon they will be using the people themselves as collateral. 

GetZeeGold's picture



When they put up the Greek cheerleader squad.....we'll know they're serious.

Dead Canary's picture

Cheerleaders with hairy backs aren't in high demand.

dognamedabu's picture

Soon? You have to be kidding. Look at USA for example. Its a tax farm. Think somehow it escaped Greek or EU officials to do the same? Wake up ppl. The guys with cash own the whip. Practice saying Yes Master. I does my work. Yes Sir.

dognamedabu's picture

My buddy Populandraus owes me $50. Him, his wife and three kids now fish to survive. Ill do my part. Throw his debt on your balance sheet. Tear one capital it is. As long as banks survive it'll all be worth their five deaths.

dognamedabu's picture

This is what happens when dealing with rich vagrants. This was very predictable. Seems bankers across the world are kissing cousins.

bentaxle's picture

First condition - Need another bailout, Tuesday

dognamedabu's picture

Tylers. I have no pity for Germans. They wouldnt be doing this all if there wasnt a net benefit for them. In fact Im sure they are the ones provoking it all. Please stop feeling sorry for the clan. The ones running them know exactly the end game.

GetZeeGold's picture



I have no pity for Germans.


Neither did General Patton.

falak pema's picture

Apparently the US high command had none for PAtton, if you believe the conspiracy clique on that! 

When it comes to "no pity for Reich wehrmacht germans" its not Patton you should mention but Jhukov, marshal of Soviet forces that took Berlin and who did all the real butchering in taking the Reichstag. Patton only wore those ribbons once it had fallen. 

Georgy Zhukov - Wikipedia, the free encyclopedia

GetZeeGold's picture



Jhukov, marshal of Soviet forces that took Berlin


Yeah but Reagan backed them down....and he was totally bluffing....or was he?

falak pema's picture

lol, Ask Putin.

Russia is a real nation, albiet demographically in wrong direction. 

Did you know that Spain and France fought 11 wars in Italy between 1494 and 1559?

That's how resilient nations states are! 

So you don't kill the russian bear with "stars wars" ramp-up. You just injure it...and that bear then has a memory. 

dognamedabu's picture

Antidotal evedence. I live in way west Canada. Every German I meet seems to have just climbed or skiied one of the nearby mountains and has perfect plan for planet Earth. Other than their obvious syndrome, quite nice people...

Oldwood's picture

Who are the winners? If you are a winner are you the loser? It seems that the meaning is somewhat lost. Today, if you enter a military conflict and win, you are the bad guy. If you enter a financial transaction and win, you are corrupt. If you outsmart someone by playing on their weaknesses you are evil and if you work harder than most you are greedy. Who are the winners? The whole world believes that gains from the least amount of work are to be prized. Money for nothing is socially more acceptable than money for work or intelligence. If you make a hundred million acting in a movie, you are big shit and to be admired. If you making it big by building something and employing people to do it, you are a greedy abuser. Who are the winners? Will we ever have winners again? If the Germans work hard, actually produce something and work for their own advantage, are they losers? If the Greeks sit on their asses, living the good life on other peoples labor, are they the winners?

dognamedabu's picture

Greeks are people. Seems you are willing to judge based on offical story. What happens if Greeks never wanted to act like Germans, yet some official cramed them together? Then said look at this: "Greeks aren't German" Schadenfreude it is.

overmedicatedundersexed's picture

the EU pledge: of the banks , by the banks, in the banks we trust. maybe the western worlds pledge come to think of it. pitty so many are dying to protect the banks and the elite who own them..if they only knew.

riddle of the day: how did the banks escape the borrow $100 and the bank owns you, borrow 1 trillion and you own the bank..How?

Dareconomics's picture

Events get stranger in Europe every day. Greek banks now are being forced to participate in the voluntary Greek bond buyback.  It seems logical to me that coercion is the opposite of voluntary participation, but what do I know.

The banks own about €31bn of €62bn in the targeted debt, and the buyback requires that €30bn must be repurchased in order for it to reach the necessary milestone to release the rest of the Greek aid tranche next month. Apparently, there are not many other takers.

The already weak banks will lose €4bn in capital, so they are requesting that they be allowed to include future tax credits in their capital computations. Since money losing enterprises do not pay taxes, these credits should not be added to capital because they are worthless.

The banks are also requesting that they be given blanket indemnity from shareholder lawsuits. Even the banks know that selling back this debt is against their interests  and their shareholders' attorneys might have something to say about this in the future.

The whole debt buy back is just a scheme to keep from defaulting as long as possible. It really will not help the Greek people in the long run: