Banks say 'yes' to haircut

Six of Greece's largest banks and eight insurance funds have confirmed they will accept the massive devaluation of their government bonds, Finance Minister Evangelos Venizelos said on Wednesday.

The since banks - National Bank of Greece, Eurobank, Alpha, Pireaus, Hellenic Postbank and ATEbank - hold a collective 40 billion euros ($53 billion) in Greek debt, which is to be cut by 53.5 percent of its original value.

Greek media have reported that at least four pension funds, which hold about two billion euros in Greek bonds, have announced their opposition to the debt swap, despite Finance Minister Venizelos warning that it was the best deal they could hope for.

Owners of the total 200 billion euros of debt have until Thursday night to declare whether they will take part in the haircut. An agreement on the write-down was a key condition for Athens receiving 130 billion euros in fresh emergency loans from the European Union and the International Monetary Fund.

The EU's Economic Affairs Commissioner Olli Rehn said on the eve of the deadline that he expected the deal to take place smoothly.

"According to our information, the debt swap should take place without a hitch since the operation is interesting financially for the private sector," Rehn said in an interview with the French daily Le Figaro on Wednesday.

Rehn said the "risk of explosion (of the eurozone) is behind us," after official data from the EU statistics office showed the eurozone economy grew by 1.4 percent last year. However he added the mild recession that the bloc has now entered, as well as persistently high unemployment, was "worrying."

Meanwhile Greek Prime Minister Lucas Papademos announced late on Tuesday that he would reshuffle his cabinet, after the resignation of the civil protection minister. Socialist Mihalis Chrysohoidis is to take up the job, while fellow Socialist Anna Diamantopoulou was picked up for Chrysohoidis's education portfolio.

acb/pfd (AFP, dpa)