Lead negotiators for banks and insurers that hold much of Greece's debt headed back to Athens today for what was termed "informal" talks on a reduction agreement that remains doggedly elusive.
Creditors from banks, insurers and investment funds owed money by Greece and grouped within the Institute of International Finance decided yesterday to also send a team of experts to assist the negotiations on a writedown of Greek debt worth an expected €100 billion.
An IIF statement said Charles Dallara and Jean Lemierre, co-chairmen of the negotiating team, would return to Athens "for informal discussions" with Greek Prime Minister Lucas Papademos and Finance Minister Evangelos Venizelos.
Greek officials seek agreement on a private sector involvement (PSI) deal under which creditors would take a cut of at least 50% on the €200 billion in debt they hold. Two previous rounds of talks have snagged on the amount of interest to be paid on the remaining debt.
Greece is struggling to reduce total debt of at least €350 billion, the equivalent of 160% of the country's annual output. The International Monetary Fund wants that cut to 120% of gross domestic product but sources close to the talks said proposals now on the table would only get it down to around 130%.
European Union officials have pressed private creditors to bear a large part of the burden and want to see progress on PSI before public creditors commit to a second EU rescue package worth €130 billion.
The IMF does not want to lend Greece any more of its funds until Athens proves its finances are on a stable footing.
The European Central Bank, which holds around €45 billion worth of Greek bonds, has ignored calls for it to assume losses of up to 50%. The ECB could then find itself forced to take losses on holdings of bonds issued by Ireland, Italy, Portugal and Spain that it has acquired under a controversial bond purchasing programme.
In Washington, the IMF denied a report yesterady that it had pressed the ECB to write off some of the value of its Greek bonds to help finalise a Greek debt deal.
International bankers have begun to voice frustration at the situation and want a rapid and comprehensive answer to the euro zone crisis. "Come up with a good solution and get it done quickly," Bank of America Merrill Lynch chief executive Brian Moynihan told the Financial Times at the World Economic Forum in Davos in Switzerland.
In Berlin, German Chancellor Angela Merkel will meet the Spanish Prime Minister Mariano Rajoy today, but the leader of Europe's biggest economy said yesterday that she would not promise financial aid if others did not do their part to resolve the impasse.
Euro zone leaders are considering talks on Greece among themselves following what has been presented as a short EU summit on Monday, diplomatic sources said in Brussels.and is aiming for a framework agreement on reducing its debt by February 2.
