France will back Athens in bid to halt euro crisis
Last updated at 10:13 PM on 27th June 2011
Nicolas Sarkozy, the French president, said his country’s banks would give Greece 30 years to repay its debts by extending loans.
German banks also voiced interest in the so-called ‘French model’ following talks between international bankers and eurozone leaders in Rome.
'French model': Nicolas Sarkozy said France's banks would give Greece 30 years to repay its debts by extending loans
Deutsche Bank chief executive Josef Ackermann said a Greek default could cause havoc in other debt-ridden countries.
‘If it is Greece alone, that’s already big,’ he said. ‘But if other countries are drawn in through contagion, it could be bigger than Lehman.’
It came as a Greek minister warned the country faces ‘catastrophe’ if politicians block £25billion of tax rises and spending cuts in a crucial vote this week.
The European Union and International Monetary Fund have warned that if the austerity package is rejected, Greece will not get the next £11billion instalment of its £98billion bailout.
Athens needs the cash to pay its bills next month and avert the eurozone’s first sovereign default.
Greek defence minister Panos Beglitis said: ‘I believe the austerity plan will pass. Voting against the plan would lead the country into big difficulties the next day, bankruptcy and default.’
It is thought that even if the package is passed, Greece will need a second bailout worth around £100billion.
The German government has led calls for banks and other private sector lenders to be involved this time around. The French plan would see banks relend, or roll over, 70 per cent of the loans they hold