Banks locked in talks with Athens to write off a big chunk of the Greek bonds they hold reiterated that they would not take more than a 50% haircut on the debt.
Charles Dallara, head of the Institute of International Finance and chief representative in the debt write-off negotiations, drew the line at a 50% loss of the face value of the bonds, as Greece struggles to cut its debt service burden.
50% is "the maximum loss that private creditors could suffer on a voluntary basis," he said in a teleconference for journalists from Zurich. "We now call on all parties to honour that agreement," he said.
He spoke after European finance ministers, weighing what role they would play in a new refinancing pact on Greece, called on both Greece and the banks to make more sacrifices in the deal.
The finance ministers told Greece today to stop dragging its feet on economic reforms if it wants a new bail-out, while urging bank creditors to make more sacrifices to tame the country's debt.
The euro zone wants a written pledge from the technocrat-led government in Athens as well as other political parties before unlocking a new €130 billion rescue for the country, Austrian Finance Minister Maria Fekter said.
"The IMF will work on a new programme with the Greeks, but we will only be able to agree on it if the ruling parties and the other parties agree on it," she said on arrival for a second day of talks among EU finance ministers. "Only if we have this written statement will there be further aid," she said.
The euro zone had already secured written pledges from the parties supporting the technocrat government led by Prime Minister Lucas Papademos that took over in November in order to release an instalment of €8 billion from the first, €110 billion bail-out the country was granted in May 2010.
Other European finance ministers piled pressure on Greece to forge ahead with structural reforms and also demanded that the country's private creditors make sacrifices by accepting a massive debt writedown.
"It's quite clear that the implementation in Greece has failed," said Swedish Finance Minister Anders Borg, whose country is not part of the euro zone but participated in a first bailout of Greece in May 2010. "When it comes to structural reform, when it comes to fiscal reform they have not delivered," he said.
After a first day of talks that ended late last night, Luxembourg Premier Jean-Claude Juncker, who heads the group of euro zone finance ministers, said the Greek programme was "off track."
Juncker said euro zone finance ministers want Greece and its EU-IMF auditors "to agree the key parameters of an ambitious adjustment programme as soon as possible."
The European Union's economic affairs commissioner Olli Rehn said Athens would have to "accelerate the implementation of structural reforms" to labour and other markets.
With Greece locked in complex negotiations with banks, Juncker pressed the private sector to accept a bond swap deal with an interest rate well below the 4% the creditors were asking.
"I think it is a difficult deal and I think that banks must realise that their negotiation position is not that strong," Borg said.
Negotiators delayed last night the deadline for a deal on a debt reduction until February 13. Diplomats, though, said that meeting the new timetable would require a deal by February 3 in practice, given the legal hurdles that will need to be cleared.
"We have the green light of the Eurogroup to close a deal with the private sector in the next few days," Greek Finance Minister Angelos Venizelos said on arrival for the second day of talks.
Euro zone leaders offered Greece last year a new, €130 billion rescue package conditioned on a debt writedown with private lenders worth €100 billion. The goal is to reduce the Greek debt mountain from around 160% of gross domestic product currently to about 120% in 2020.
"Greece and the banks have to do more in order to reach a sustainable debt level," said Dutch Finance Minister Jan Kees de Jager. "And we have to await the discussions about that because a sustainable debt level is absolutely a precondition for the next programme," he said.
Greece is running short on time, with a bond redemption totalling €14.4 billion due on March 20 that it would unlikely have sufficient funds to settle.
