Sallas against a bigger haircut
European governments are pushing for a greater haircut on Greek bonds, but the chairman of Piraeus Bank on Friday rebuked those who support such an option.
Michalis Sallas suggested that ?those who are calling for a bigger haircut have either got nothing to lose or do not realize the consequences of that move. Unfortunately, the latter include people who were supposed to understand.?
He explained that based on the interest expressed by bondholders for a voluntary haircut of 21 percent, according to the July eurozone agreement, the increase of a haircut from 21 percent to 50 percent would not reduce the Greek debt by 180 billion euros, as many believe, but by just 20-25 billion. Even that amount would mean Greece would need to return to its creditors for more in order to support the social security funds that would lose out and to recapitalize banks.
Eurogroup chief Jean-Claude Juncker said on Friday that banks must be aware that unless the voluntary agreement of bondholders is sufficient, then the target will be for a non-voluntary participation of the private sector.
