Bloomberg News

ECB Should Cut Greek Debt by Returning Gain, ING Chief Says

February 01, 2012

(Updates with ECB declining to comment in seventh paragraph. For more on Europe’s debt crisis, click on EXT4.)

Feb. 1 (Bloomberg) -- The European Central Bank should help reduce Greece’s debt by returning gains on Greek government bonds it bought at a discount, according to ING Groep NV Chief Executive Officer Jan Hommen.

“I consider it logical as the ECB bought the paper at a discount,” Hommen told reporters in The Hague late yesterday. “I’m not saying they should take a loss. But they have a potential gain on their position which they bought at a discount.”

The banker’s comments highlight pressure on ECB President Mario Draghi to join private investors in a debt writedown being negotiated as part of a second rescue package for Greece. Amsterdam-based ING is among the companies represented on a steering committee of the Institute of International Finance, the Washington-based industry group that’s leading the debt-swap talks on behalf of private bondholders.

The investors agreed to a 50 percent cut in the face value of more than 200 billion euros ($262 billion) of debt by voluntarily exchanging bonds for new securities. The swap would lead to a loss of about 70 percent, according to people familiar with the matter.

The Frankfurt-based ECB holds 36 billion euros of Greek bonds, Barclays Capital in London estimated in a Jan. 6 report. Overall, the bank has bought 219 billion euros of sovereign debt in the euro area since an initial rescue of Greece in May 2010.

Hommen declined to say how much the ECB should contribute or how much that could reduce Greece’s debt. “It could make a difference,” he said.

An ECB spokeswoman declined to comment on Hommen’s remarks when contacted by telephone.

--With assistance from Jonathan Stearns in Brussels and Jana Randow in Frankfurt. Editors: James Hertling, Craig Stirling

To contact the reporter on this story: Maud van Gaal in Amsterdam at mvangaal@bloomberg.net

To contact the editor responsible for this story: Frank Connelly at fconnelly@bloomberg.net


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