Second bailout agreed for Greece
Feb. 20, 2012, 11:18 p.m. EST
By Sarah Turner , MarketWatch SYDNEY (MarketWatch) — European financial officials have agreed to the terms of a fresh aid package deal for Greece, according to reports out Tuesday citing European officials. Following a meeting that went into the early hours of Tuesday morning Brussels time, finance ministers and other top officials agreed to release another 130 billion euros ($171.9 billion) to Greece, the reports said. The country’s debt-to-GDP ratio is expected to fall to just over 120% by 2020, according to the reports, down from around 160% in 2011. Bondholders will take a final haircut of more than 53% on €200 billion worth of privately-held Greek government debt, the reports said. That was slightly more than expected, as the writedown for private bondholders was initially expected to cut Greece’s debt load by around €100 billion. Investment banks have paid their staff three times as much as they have generated in pre-tax profits over the past six years, raising fresh questions about the division of rewards between employees and shareholders in the securities industry. Photo: Getty Greece needed to agree to terms on fresh funds with its institutional lenders and reach a deal with its private bondholders in order to head off default as it faces a €14.5 billion bond redemption on March 20. The euro EURUSD +0.09% jumped after the reports, climbing to $1.3290 in minutes, up from $1.3243 on Monday, though it later eased back slightly to $1.3265. Prior to the meeting, Luxembourg Prime Minister Jean-Claude Juncker, who chairs meetings of the euro-zone finance ministers, told reporters that he was optimistic a bailout agreement would be finalized. Euro-zone leaders had agreed in principle to the second Greek bailout last October. Greece had already received €110 billion in funds from its European partners and the International Monetary Fund when its first bailout was agreed in May 2010. But Greece’s inability to meet fiscal targets amid a deepening recession caused international creditors to demand a further round of unpopular austerity measures and reforms before they would finally agree to a deal for additional aid. Bankers pocket three times pre-tax profits
