Greek pension funds to decide on debt restructuring

Greece?s struggling pension funds faced a decision on Tuesday on participating in a huge state debt swap which unions say means disaster for the savings of millions of pensioners.

The Greek government has given holders of state debt until Thursday to decide whether to join the initiative, which aims to cut 107 billion euros ($142 billion) from Greece?s total 350-billion-euro debt mountain.

The civil servants? union Adedy has scheduled a protest at its own pension fund, Teady, later on Tuesday.

?We call on fund boards to refrain from a new crime against their members,? the union said, terming the debt write-down ?a coup de grace to fund reserves.? Greek Finance Minister Evangelos Venizelos last month told parliament that pension funds hold 27 billion euros in state debt, and that these holdings were fully protected.

?Debt restructuring will not affect pensions,? Venizelos said.

?Each year the state gives the funds over 13 billion euros in subsidies,? he said. ?Hence, in two years, the state budget pays out the entire value of their holdings…we will restore fund possessions to the full.? The debt rollover, supported by a major bank association, is tied to a 130-billion-euro eurozone bailout that will enable Greece to avert default in two weeks when it must repay a maturing bond worth over 14.4 billion euros.

The Institute of International Finance, which represents leading banks and investors, on Monday said key holders of Greek debt had accepted the plan.

Members of the IIF steering committee that accepted the deal include AXA, BNP Paribas et CNP Assurances of France; Germany?s Allianz, Commerzbank et Deutsche Bank; Italy?s Intesa San Paolo; ING of the Netherlands; and Greylock Capital Management of the United States.

Greece?s Alpha Bank, Eurobank EFG et National Bank of Greece have also accepted the terms.

The only steering committee member not on the list is Germany?s biggest regional bank Landesbank Baden-Wuerttemberg (LBBW), although the IIF said the approval process was still underway.

Greece has enacted legislation on a so-called collective action clause to force bondholders to accept the exchange if a majority approves the terms.

According to Germany?s Der Spiegel weekly, the European Central Bank expects this clause will have to be activated owing to low investor demand.

The clause can be invoked if at least 66 percent of banks agree to it. This so-called super-majority then forces all creditors to go along with the deal.

Athens has also warned that 75 percent of eligible investors had to participate or the exercise would be called off.

The deadline for accepting the bond swap offer is Thursday at 2000 GMT. [AFP]

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