Business and Management
Submitted By maximad
BRUSSELS (Reuters) - EU finance ministers sought to break a deadlock over shoring up European banks on Saturday, after euro zone countries called for steeper losses for holders of Greek bonds to help resolve a debt crisis that threatens to damage the global economy.
With France and Germany deeply divided over how to bolster the rescue fund that underpins the euro zone, leaders have scheduled a string of meetings in the next days to tackle Greece's debt and limit its impact on the banking system.
Euro zone finance ministers made some progress on Friday, agreeing that holders of Greek government bonds would need to take far more than the 21 percent haircut brokered in July.
"We have agreed yesterday that we have to have a significant increase in the banks' contribution," Jean-Claude Juncker, who chairs the euro group of finance ministers, said on Saturday morning.
On Saturday, EU finance ministers -- including those from countries not in the euro zone -- were trying to decide ways to bolster the capital of European banks to cope with any Greek default and wider contagion across the continent.
EU officials say almost 100 billion euros is required to reinforce the region's banking system. Banks that cannot raise money on the markets will have to turn to national governments, and finally to the European Financial Stability Facility (EFSF).
European banks will be required to increase their core tier one capital ratio to 9 percent to help them withstand losses on sovereign debt, officials have said.
However, the European Commission will urge ministers not to announce a plan on bank recapitalization before they have settled other issues, said one EU official.
These issues included the size of losses for holders of Greek bonds and how to boost the firepower of the euro zone's rescue fund, the EFSF.
"You cannot just progress on recapitalizing banks," said the…...