Photo: Robin Zebrowski on Flickr
A top official at the European Central Bank said off the record that the ECB/EU/IMF troika could require private holders of Greek bonds to accept a 75% haircut rather than the 21% they were expected to take, according to Italian newspaper Linkiesta (via @FGoria).This matter could be discussed at an October 3 Eurogroup meeting, though it probably won’t appear on the official agenda.
Such a revision would seriously injure European banks that are struggling to maintain healthy capital levels. Whispers about euro-TARP like plans to recapitalize the European banking sector spurred on markets earlier this week.
Meanwhile, French banks — probably some of the most vulnerable to such a haircut — took a tumble on that news in U.S. markets:
Credit Agricole: -6.78%
BNP Paribas: -4.64%