Follow Us

Follow us on Twitter  Follow us on LinkedIn
 

02 September 2011

German ‘bad bank’ in Greek debt swap


FMS Wertmanagement is the first of Germany's two state-backed bad bank agencies to confirm it will take part in the Greek debt swap, after uncertainty about how far the institutions would support the bond rollover, which is aimed mainly at securing voluntary private sector participation.

FMS, which is ultimately owned and guaranteed by the German government, was set up last year so that €175 billion of toxic and unwanted assets could be offloaded from the balance sheet of Hypo Real Estate, a German property lender that had invested heavily in sovereign debt. HRE almost collapsed in the financial crisis and needed to be nationalised. Six other German banks and insurers have given a commitment that they will support the bond swap being co-ordinated by the Institute of International Finance, a body representing many banks and financial institutions. However, FMS is the first to quantify its commitment, which it said would involve rolling over 13 bonds with a total face value of €975 million.

FMS said its Greek exposure was almost €8.8 billion. Only bonds set to mature up to 2020 are included in the swap, which offers banks a range of ways to roll over or exchange debt and are set to reduce Athens’ funding costs by €13.5 billion at the targeted 90 per cent take-up rate.

Full article (FT subscription required)



© Financial Times


< Next Previous >
Key
 Hover over the blue highlighted text to view the acronym meaning
Hover over these icons for more information



Add new comment