(Adds comment from Hypo RE's FMS bad bank to participate in
program.)
THE EVENT: A crucial deadline is approaching as Greece seeks to
get commitments by its bondholders to agree to a debt-restructuring
plan that will involve big losses on their holdings.
The restructuring involves debt worth EUR206 billion in the
hands of the private sector, although the current offer is extended
to holders of EUR177 billion of bonds under Greek law. Greece needs
to secure at least 90% of that for the bond exchange to proceed on
a voluntary basis.
If under 90% of holders participate, Greece has the option of
invoking collective action clauses to force remaining holders to
accept the deal. But for that to happen, at least half of the bond
holders must participate in a related vote and at least two-thirds
of them should vote in favor of the bond-swap terms.
THE DEADLINE: Bondholders have until 2000 GMT Thursday to accept
the deal, which will result in the exchange of existing bonds for
new ones with a face value slashed by 53.5%.
The Greek government will announce the results at 0600 GMT
Friday, a person close to the finance ministry said.
Late Thursday, a Greek government official said that more than
75% of private holders of Greek debt had indicated they plan to
participate. "Yesterday evening the participation rate exceeded
75%," the official said. "At the moment, it appears that we will
exceed even the optimistic scenario."
Charles Dallara, managing director of the IIF, also said
Thursday that he is "quite optimistic" that the deal will come
together in the final hours. He expressed optimism that
participation will be "very, very high."
Officially, as of late Wednesday, about 52% of the EUR206
billion ($271 billion) in bonds up for restructuring had been
pledged.
THE IMPORTANCE: The bond swap is an integral part of a second,
EUR130 billion bailout loan for Greece that will keep it from
becoming the first euro-zone member to default when a EUR14.5
billion bond redemption comes up March 20.
DETRACTORS: Some bondholders, particularly hedge funds, are
likely to reject the nation's debt-restructuring plan, gambling on
being repaid for their bonds in full--or at least more than
everyone else. According to some sources, the move could back-fire
and result in bondholders losing more money than they would have
done under the swap agreement.
WRITE-DOWNS: Many bondholders have already set aside provisions
covering at least the level of losses agreed by the IIF, limiting
the financial impact on them if the losses were to deepen. The
participation rate will be calculated on the nominal, or face,
value of the holdings.
Here are highlights of bank comments from financial companies
ahead of the deadline. Banks and insurers in France, Germany and
Greece have the majority of the holdings:
STEERING COMMITTEE:
*There were 13 banks, insurance firms and funds participating in
the steering committee that negotiated the terms of the debt
restructuring under the IIF, which represents some 450 financial
institutions. They vowed to participate in a statement earlier this
week.
Steering committee companies and others officially pledging to
participate, according to the IIF, as of Wednesday: Ageas NV
(AGS.BT), Allianz SE (ALV.XE), Alpha Bank AE (ALPHA.AT), AXA SA
(CS.FR), Banque Postale, BNP Paribas SA (BNP.FR), CNP Assurances
(CNP.FR), Commerzbank AG (CBK.XE), Credit Agricole SA (ACA.FR),
Credit Foncier, DekaBank, Deutsche Bank AG (DB), Dexia SA
(DEXB.BT), Emporiki Bank of Greece SA (TEMP.AT), Eurobank EFG
(BEUR.UR), Assicurazioni Generali SpA (G.MI), Greylock Capital
Management, HSBC Holding PLC (HBC), ING Bank, Intesa Sanpaolo SpA
(ISP.MI), Landesbank Baden-Wurttemberg, KBC Group NV (KBC.BT),
Marfin Popular Bank PCL (CPB.CP), Metlife, National Bank of Greece
SA (ETE.AT), Piraeus Bank, Royal Bank of Scotland Group PLC (RBS),
Societe Generale SA (GLE.FR) and UniCredit SpA (UCG.MI).
ADDITIONAL BANK/INSURER COMMENTS:
GERMANY:
*Allianz SE (ALV.XE) said Wednesday it will take part in the
swap, which it said was economically viable for the insurance
company. It said it held bonds with a nominal value of about EUR1.3
billion at the end of 2011.
*Commerzbank, which was on the IIF participation list Monday,
holds about EUR3 billion in Greek sovereign debt in nominal
terms.
*Deutsche Bank, which was on the IIF participation list Monday,
holds about EUR1.5 billion in Greek government debt in nominal
terms.
*DZ Bank said Wednesday the bank will participate, along with
all other holders of Greek sovereign debt within the cooperative
bank sector. The sector includes, among others, asset manager Union
Investment and insurer R+V. The bank holds around EUR1.15 billion
in Greek sovereign debt, according to a Dow Jones Newswires
calculation.
*Helaba said it will participate in the debt swap. The bank
holds EUR85 million in Greek sovereign debt nominal value at the
end of 2011.
*DekaBank has said it will partipate in swapping Greek sovereign
debt; it holds around EUR100 million based on nominal value.
*Hypo RE's FMS Wertmanagement said late Thursday that will
participate. FMS, which was put under 100% German government
ownership in 2009, said it plans to swap some EUR8.2 billion
nominal value in Greek sovereign debt and loans to Greek companies,
making it one of the largest German holders of Greek debt. It has
EUR7.2 billion in Greek sovereign debt.
*KfW Bankengruppe, the German government's development bank,
will participate, Chief Executive Ulrich Schroeder told reporters,
adding that sentiment about private-sector participation in the
swap has "dramatically changed" in the past few days. It has about
EUR250 million in nominal value.
*LBBW said Wednesday it will participate in the PSI. It held
around EUR628 million in Greek sovereign debt at the end of
September.
*Munich Re AG (MUV2.XE) will participate, a spokeswoman said
Wednesday. Munich Re held Greek sovereign debt with a nominal value
of EUR1.59 billion at the end of September.
*WestLB's EAA bad bank said it is participating in the debt
swap. It still holds EUR900 million in Greek government bonds in
nominal value. WestLB itself no longer holds Greek sovereign
debt.
*WGZ-Bank said it will take part. The bank holds EUR530 million
in Greek sovereign debt nominal value as of September 2011.
GREECE:
*Alpha Bank, Eurobank, Piraeus Bank and National Bank of Greece
are all on the steering committee and Monday vowed to
participate.
*On Wednesday, members of the Private Creditor-Investor
Committee for Greece, who hold 39.3% of the eligible bonds, or
EUR81 billion, said they intend to participate in the bond
exchange.
The institutions that comprise the PCIC are Emporiki Bank
(TEMP.AT) and Marfin Popular Bank (CPB.CP), along with Alpha Bank,
Eurobank, Piraeus Bank and NBG.
ITALY:
*UniCredit SpA (UCG.MI): Italy's second-largest bank by market
value said it will participate in the bond swap. As of the end of
the third quarter of 2011, the nominal value of its holdings was
EUR541 million.
NORDICS:
*Jyske Bank A/S (JYSK.KO) is the largest holder of Greek
sovereign debt in the Nordic region, with bonds with a nominal
value of around EUR68 million. It hasn't stated its intentions
ahead of Thursday's restructuring agreement. Other Nordic banks
hold even smaller levels, or no Greek debt at all, as the region's
banks have so far managed to limit their exposure to Southern
Europe's troubled economies.
PORTUGAL:
*Banco BPI SA (BPI.LB). Will participate. As of Oct. 31, the
nominal value of its Greek holdings was EUR480 million.
*Banco Comercial Portugues SA (BCP.LB), with nominal holdings of
about EUR719 million, said it will participate.
*State-owned Caixa Geral de Depositos, with EUR133 million
exposure, will participate.
NETHERLANDS:
Delta Lloyd NV (DL.AE): The Dutch insurer said Thursday that it
isn't planning to participate in a debt-restructuring plan for
Greece, because it has principal objections. The CEO said he will
only participate if all private bondholders participate. This will
only happen when less than 90% of holders join the exchange, as it
would invoke collective action clauses that would force the
remaining holders to accept the deal. "We think everyone should
participate," Hoek said. Delta Lloyd holds EUR71 million in Greek
government bonds in nominal value.
UK:
*Royal Bank of Scotland Group PLC (RBS) was on the original IIF
participation list. The bank said its nominal holdings were GBP1.6
billion.
*Standard Chartered PLC (STAN.LN) said it had no exposure to
Greek sovereign debt.
*Lloyds Banking Group PLC (LYG) said it has no exposure to Greek
sovereign debt.
*Barclays PLC (BCS) declined to comment on the PSI and simply
said its exposure to Greek sovereign debt was "minimal."