Bloomberg News

Ackermann May Travel to Athens This Weekend for Greek Talks

February 02, 2012

(Updates with comments on contagion in fourth paragraph.)

Feb. 2 (Bloomberg) -- Deutsche Bank AG Chief Executive Officer Josef Ackermann said he’s confident a voluntary swap for Greek debt can be reached and that he may travel to Athens this weekend for the talks.

Private creditors are facing a loss in net present value of more than 70 percent and the focus is now on other parties “doing their part,” not financial firms, Ackermann said today in television interviews after a press conference in Frankfurt.

An agreement could be reached “in the coming weeks, maybe days,” said Ackermann, also chairman of the Institute of International Finance. The group, based in Washington, has more than 450 financial firms as members and is representing private creditors in the talks.

The Greek government needs to reach a deal with creditors and secure a second European Union-led bailout by March 20, when it faces a 14.5 billion-euro ($19.1 billion) bond payment. While Portugal can’t be compared to Greece, if Greece “fell” the western European country could be the next on the list in terms of contagion, Ackermann said.

The parties negotiating losses on Greek sovereign bonds are “no longer very far apart,” he said earlier today at a press conference where he presented Deutsche Bank’s earnings. A deal on creditors taking losses on Greek debt may reduce the risk of contagion in the euro area to a “very low level,” he said.

ECB’s Position

The European Central Bank will probably refuse to show its hand on how it will help cut Greece’s debt burden until investors and the government have agreed to a deal, according to economists from ING Group to Deutsche Bank.

The ECB has purchased 219 billion euros of debt-strapped nations’ bonds since 2010. Between 36 billion euros to 55 billion euros are invested in Greek sovereign debt, according to estimates by Barclays Capital and UBS AG.

“So much is on the line that everyone should make a contribution,” Ackermann said when asked if the ECB should participate. “I’m not naming any names.”

Bondholders negotiating a debt swap with Greece may get a sweetener tied to a revival in economic growth that would ease the impact of accepting a lower interest rate on the new bonds, people with knowledge of the talks said this week.

“Where we stand now is a net present value loss of 70 percent,” Ackermman said. “That’s a really attractive offer for Greece, but then a default would cost a lot more.”

--Editors: Steve Bailey, Jon Menon

To contact the reporters on this story: Aaron Kirchfeld in Frankfurt at akirchfeld@bloomberg.net; Nicholas Comfort in Frankfurt at ncomfort1@bloomberg.net

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


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