Euro chief: agreed on sizable cut to Greek debt

Associated Press
Luxembourg's Prime Minister and head of the eurogroup Jean-Claude Juncker, left, speaks with from right, German Finance Minister Wolfgang Schaeuble, IMF Managing Director Christine Lagarde and Spanish Finance Minister Elena Salgado during a meeting of eurozone finance ministers in Brussels on Friday, Oct. 21, 2011. The chairman of the eurogroup of finance ministers says the delay to a debt crisis creates a "disastrous" image of the eurozone to the outside world. Jean-Claude Juncker, who is also the prime minister of Luxembourg, added that it's not necessarily just France and Germany that have differences of opinion on how to tackle the crisis. (AP Photo/Virginia Mayo)
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BRUSSELS (AP) — The chairman of the Eurogroup says eurozone finance ministers have agreed that banks need to take substantial losses on their Greek bondholdings.

Jean-Claude Juncker said Saturday that "yesterday we agreed that we need a substantial increase in the contribution from the banks."

Juncker, who is also the prime minister of Luxembourg, did not say how big the cuts would have to be.

In July, banks had tentatively agreed to take a loss of about 21 percent on Greek bonds, but it has since become clear that that is not enough to make Greece's massive debts sustainable.

Austria's Finance Minister Maria Fekter said the chief negotiator for the eurozone has been asked to restart negotiations with banks. That suggests that the eurozone is still aiming for a voluntary deal with banks.

THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP's earlier story is below.

BRUSSELS (AP) — Sweden's finance minister says European banks need to accept substantially more losses on their Greek debt and banks need to be shored up.

Anders Borg spoke before meeting with his colleagues from across the European Union in Brussels on Saturday to discuss how to address the eurozone debt crisis, which is raising concerns over Greece's ability ever to dig itself out of its debt and the banks' ability to withstand a potential default on its bonds.

Borg told reporters before the meeting that Greece needs a "substantive haircut" — a writedown of its debt. Some analysts fear, however, that banks aren't prepared to weather such losses and are also calling for them to be forced to keep more money on hand.

Borg said credibility needs to be restored in the banking system.

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