European Finance Ministers Near Deal on Aid to Banks
European finance ministers said on Saturday that they were near a deal to strengthen capital reserves for their troubled banks — the first part of a package of measures meant to stem the worsening European debt crisis.
On the second day of talks here, the ministers also said that holders of Greek bonds would have to take much bigger losses than the 21 percent originally agreed to in July, though one bank official said that despite the ministers’ consensus, no agreement was near on write-offs that could reach as high as 60 percent.
The ministers also reported that France and Germany had made progress on a third issue, how to increase the firepower of a rescue fund for the euro zone. Germany’s chancellor, Angela Merkel, and the French president, Nicolas Sarkozy, along with other European leaders, continued negotiating later Saturday.
“I believe that now we have reached a more realistic view of the situation in Greece and that we will provide the necessary means to be able to protect the euro,” Mrs. Merkel said as she arrived at a gathering of European center-right leaders outside Brussels. The Sunday meeting would not bring final decisions, she said, adding that the leaders would take definitive steps at another scheduled meeting on Wednesday.
Despite resistance from Spain and Italy, agreement seemed close on a plan worth around 100 billion euros, or $138 billion, to recapitalize European banks. The measure is intended to help banks better withstand turmoil in the markets.
“We have laid down foundations for an agreement on the banking side,” said Anders Borg, Sweden’s finance minister.
The talks on Saturday established an improved tone over the past week, when differences between Mrs. Merkel and Mr. Sarkozy burst into the open.
But the challenge remains for leaders to construct a comprehensive and credible package of measures by Wednesday’s meeting…