Bloomberg News

Austria’s Fekter Says Greece Can’t Cost ‘Considerably’ More

October 25, 2011

(Updates with comments from Faymann in sixth paragraph. For more on the debt crisis, see EXT4.)

Oct. 25 (Bloomberg) -- Austria’s Finance Minister Maria Fekter said Europe’s highest-rated countries aren’t ready to provide “considerably” more “fresh capital” than agreed at the European Union’s July summit.

“The AAA countries Germany, the Netherlands, Austria and Finland have signaled that they won’t consider putting up very much in fresh cash,” Fekter told reporters in Vienna today. “We’re committed to our contribution, but the measures can’t cost much more than that because we’ve got to look after our AAA ratings,” she said as she entered a weekly government meeting.

European leaders return to Brussels tomorrow for a second summit in four days. They are still jousting with banks over the size of losses Greek bondholders will accept while deliberating over leveraging the EU’s rescue fund after ruling out tapping the European Central Bank’s balance sheet.

While policy makers are aware a decision can’t be pushed back further, Fekter said they needed the time until now to erect “firewalls” including backstop mechanisms for banks to prevent the sort of “uncoordinated events” that followed the collapse of Lehman Brothers Holdings Inc. in 2008.

Fekter said she prefers a voluntary agreement with private creditors to cut Greece’s debt, because “a voluntary restructuring is better and carries fewer risks than a full bankruptcy.”

Austrian Chancellor Werner Faymann said that it’s the EU’s “number one aim for this to be voluntary,” as “everything else -- selective default event, insolvency -- has other consequences.”

The EU also aims to get the “highest possible participation” of private investors on Greece, he told reporters in Vienna, adding that he’d always spoken of a haircut of 40 percent to 50 percent.

--Editors: Patrick G. Henry, Eddie Buckle

To contact the reporters on this story: Zoe Schneeweiss in Vienna at zschneeweiss@bloomberg.net; Boris Groendahl in Vienna at bgroendahl@bloomberg.net

To contact the editor responsible for this story: Angela Cullen at acullen8@bloomberg.net


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