The government welcomed yesterday a proposal by investment bank JP Morgan and hedge fund North Asset Management (NAM) to repurchase a state bond from pension funds and said that claims of financial problems existing in social funds are groundless. «The offer by the underwriting bank for the -280 million bond toward pension funds is a positive development. It also shows that there is no problem with the issuing of the bond that took place under favorable terms for the state,» the Finance Ministry said. On Thursday, JP Morgan and the London-based NAM said they had agreed in principle to repurchase a -280 million bond at the center of the scandal. The companies said that funds have until Friday to decide whether they want to recover 100 percent of the money placed in the financial instrument – less any interest that may have already been paid on it. Sources said that losses arising from the buyback are likely to be split between the two companies. The structured bond, issued to raise funds for the Defense Ministry, ended up in the possession of pension funds at unfavorable prices after being sold to NAM, HypoVereinsBank and the Acropolis brokerage house. News of the bond purchase sparked public outcry amid accusations of poor and corrupt management practises at pensions funds. Trade unions are demanding that all structured bonds sold to pension funds in the past three years be bought back. The conservative government reacted by sacking Labour and Social Security Minister Savvas Tsitouridis. Talk of the bond scandal for more than two months has hurt the conservative government’s popularity in an election year. National elections are due to be held by March next year. «A few days ago there were many people that claimed that money has been lost, that there are massive financial holes in social security funds and now we see that such gaps do not exist,» said government spokesman Evangelos Antonaros. JP Morgan and NAM officials have been asked to give evidence before a parliamentary committee investigating the bonds. JP Morgan told the government it would appear in Parliament next month to discuss its role in the deal. NAM said earlier this week that it was unable to appear before the economic committee, citing reasons of confidentiality on account of the ongoing investigation into the affair.