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Banks under pressure over Greece

Tuesday, October 04, 2011 - 02:17

Oct. 4 - A meeting of EU finance ministers in Luxembourg produces few concrete steps in tackling Europe's deepening debt crisis, which threatens to spread to European banks. Kirsty Basset reports.

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Protesters make themselves at home in the office of Greece's Labour Minister, as they continue venting their outrage over looming public sector dismissals and other austerity measures. The markets believe Greece will ultimately default on its debt - despite firm denials from Eurogroup President Jean-Claude Juncker, at a meeting of euro zone ministers in Luxembourg. (SOUNDBITE)(English) EUROGROUP PRESIDENT JEAN-CLAUDE JUNCKER SAYING: "We had no one advocating a default for Greece, everything will be done to avoid that and it will be avoided and nobody was advocating an exit of Greece out of the euro area." It's not just Greeks feeling the pain - European finance ministers are considering making banks take bigger losses on Greek debt, after Athens admitted it would miss key deficit targets. Markets received few assurances from the meeting - if anything it stoked concerns about a Greek default. Reuters Banking Correspondent Steve Slater says everyone wants to see more action from European policy makers. (SOUNDBITE)(English) REUTERS BANKING CORRESPONDENT STEVE SLATER SAYING: "At the moment, they seem to be dithering on Greece and a lot of other issues and haven't really come up with anything concrete to reassure people, and the banks in particular." The ministers said a vital 8 billion euro payment to Greece would be delayed until mid-November. Hopes that the European Central Bank might play a role in increasing the clout of the euro zone bailout fund have also been watered down. (SOUNDBITE)(English) EUROGROUP PRESIDENT JEAN-CLAUDE JUNCKER SAYING: "As far as the involvement of the ECB is concerned, I don't think that this will be the main avenue of our considerations." Investors believe the crisis is now spreading to the banking sector. German Finance Minister Wolfgang Schaeble says euro zone countries intend to support banks - but that didn't stop European banking shares falling on Tuesday, particularly Franco-Belgium bank Dexia which plunged as much as 38 per cent, due to its heavy exposure to Greek debt. Kirsty Basset, Reuters.

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Banks under pressure over Greece

Tuesday, October 04, 2011 - 02:17