Greece

Greek premier Lucas Papademos held last-minute talks on Sunday with international lenders on wage and pension cuts amid fears that political leaders may reject a second €130bn bail-out and plunge the country into a chaotic default, the Financial Times reported. Evangelos Venizelos, finance minister, said “It’s not an impasse but there are problems for the Greek side” over terms of a medium-term package being negotiated with the so-called “troika” – representatives of the European Commission, European Central Bank and International Monetary Fund.

The possible involvement of the European Central Bank in Greece's second bailout package continues to be under discussion among senior euro-zone and International Monetary Fund officials, who see a need for more resources to provide Athens with sufficient debt relief, The Wall Street Journal reported. The ECB's role is being actively discussed this week, said people with direct knowledge of the matter.

The leader of the rightwing Laos party, junior partner in the Greek coalition government, has appealed to the European Union to ease the terms of the country’s second €130bn bail-out, or risk triggering a “social explosion”, the Financial Times reported. The passionate plea from George Karatzaferis came as Greek officials are scrambling to meet a deadline on Friday to restructure €200bn of debt controlled by private bondholders, an essential condition for the next rescue plan.

Greece must make "difficult" decisions in the coming days to clinch a debt swap agreement and a 130 billion euro ($170 billion) bailout package needed to avoid an unruly default, the government said on Tuesday, Reuters reported. Near-bankrupt Greece is struggling to convince skeptical lenders it can ram through spending cuts and labor reform to help bridge a funding shortfall driven by a worsening economic climate and its previous reform plan having veered off track. With a long-awaited debt swap deal largely almost secured, Athens' focus is now squarely on the reform front.

Investors participating in a deal to slash Greece's massive debt would face an overall loss on their bond holdings of more than 70 percent, a person involved in with the negotiations said early Tuesday, the Associated Press reported. European leaders at a summit in Brussels said a final debt deal could be signed off in the coming days, together with a second multibillion-euro bailout packaged designed to save the country from a potentially disastrous bankruptcy.

Greece's Alpha Bank, the country's third-largest lender by assets, said Monday it was freezing plans to merge with cross-town rival EFG Eurobank Ergasias SA pending further details over a EUR100 billion debt write-down Greece is now negotiating with creditors, Dow Jones reported. In a statement issued to the Athens stock exchange, the bank said it would call a meeting of shareholders to seek fresh approval for the tie-up. It hinted that the debt talks--known as the Private Sector Involvement--could overturn the financial benefits of the deal.

Negotiations between Greece and its creditors to reduce its debts have developed into an impasse because the nature of the creditors has changed since the scheme to involve private sector investors on a voluntary basis was first mooted nearly a year ago, International Financing Review reported in an analysis. Back then private sector bondholders made up the majority of Greece’s €350bn debts. However, as loans from the original €110bn bailout package have been deployed, principally to pay back maturing bonds, the IMF and European Union countries have built sizeable stakes.

Greece came under heavy pressure at a meeting of eurozone finance ministers on Monday to revamp a stalled debt restructuring deal with private bondholders and accelerate structural reforms in order to avert a disorderly default, the Financial Times reported. Ministers from Germany and the Netherlands rounded on their Greek counterpart and urged him to deliver on promised reforms to the economy, in a sign that patience with Athens is wearing thin just as eurozone members begin to finalise the details of a second bail-out package.

Debt-crippled Greece has named some 4,000 alleged tax dodgers, including a former media magnate and a prominent entertainer, with the worst offender owing the state nearly euro1 billion ($1.3 billion), the Associated Press reported. But much of that money might never be reclaimed, as some of the top offenders are in prison or their companies are bankrupt.

Euro zone finance ministers will decide on Monday what terms of a Greek debt restructuring they are ready to accept as part of a second bailout package for Athens after negotiators for private creditors said they could not improve their offer, Reuters reported. Resolving the issue of a Greek debt swap is key to putting Athens' debt on a sustainable path and avoiding a chaotic default that could threaten the whole currency bloc.