24 October 2011, 18:06  EU official: Negotiators from the EU and banks are "relatively close"

An EU official has said negotiators from the EU and banks are "relatively close" to a deal to write off around half of Greece's €350 billion debt pile. EU economic affairs commissioner Olli Rehn's spokesman, Amadeu Altafaj was speaking to reporters in Brussels after last night's EU summit.
While talks are ongoing, he underlined that the EU's "preference" was "clearly for a voluntary approach".
A source close to the negotiations told the AFP news agency that the EU had asked banks to agree a 60% write-down, but that banks are so far sticking to their offer of a 40% cut. "It will probably end up somewhere in the middle," a diplomatic source told AFP.
Greek banks hold about €44 billion in sovereign debt bonds, and pension funds another €8 billion. A former Greek deputy head of the European Central Bank, Lucas Papademos, has warned that a 50% cut equates in reality to a 20% reduction given Greek state requirements to step in and aid Greek banks locked out of inter-bank markets. European leaders last night voiced confidence about their progress towards a resolution of the region's debt worries at a key gathering in Brussels. Taoiseach Enda Kenny said he was more hopeful that leaders would be able to sign a comprehensive deal on the debt crisis, following lengthy discussions at the summit.
The talks concluded last night, but EU finance ministers and EU leaders will return to Brussels on Wednesday to finalise matters. The President of the European Commission Jose Manuel Barroso described negotiations as having progressed well. Following a weekend of tough talking, involving EU finance ministers, foreign ministers and leaders, there is a slightly more optimistic mood in Brussels. Mr Kenny said that, for the first time, he found the leadership of EU focusing on the fundamentals - from the situation in Greece to the fear of contagion. That observation was backed by Mr Barroso, who said the talks were "a work in progress and it's progressing well", while IMF chief Christine Lagarde said good progress has been made.

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