Aug. 29 (Bloomberg) -- Germany expects WestLB AG and Hypo Real Estate Holding AG's bad banks to swap Greek bonds for paper with longer maturities as part of a 135 billion-euro ($196 billion) deal to halt the spread of the sovereign debt crisis.
"It is a decision to be taken by the bad banks," Silke Bruns, a spokeswoman for the ministry, told reporters at a press conference in Berlin today. "We assume that they will contribute their share."
Greece solicited support from 57 countries for private investor involvement in the rescue plan for Europe's most- indebted nation on Aug. 25, saying it could scrap the debt swap if participation by banks didn't reach 90 percent of the total. Banks, insurers and other private investors pledged to participate in the bond exchange and debt buyback program as part of a new rescue package for Greece agreed last month.
FMS Wertmanagement, the vehicle formed to absorb Hypo Real Estate's assets, and WestLB's Erste Abwicklungsanstalt hold a combined 8.5 billion euros of Greek debt and haven't committed to the swap that is aimed at reducing Greece's debt load, Financial Times reported today.
Erste Abwicklungsanstalt said Aug. 11 that "it is still open whether or not and how EAA will participate in the restructuring measures" as details of the package have yet to be determined. While the bad bank hasn't changed that position, it has since said it is "open" to participating in the swap, Marie Luise Hoffmann, a spokeswoman for EAA, said today.
'Not Hesitating'
FMS has yet to make an official decision, Andreas Henry, a spokesman for the bad bank, said today by phone. "We're not hesitating," he said. "Such decisions take longer at FMS because several committees and representatives including the Finance Ministry need to approve such a decision."
DZ Bank AG and Landesbank Baden-Wuerttemberg also haven't committed to the swap, the FT said.
DZ Bank, Germany's largest cooperative lender, will participate in a swap of Greek government bonds as part of a rescue package for the country, Chief Executive Officer Wolfgang Kirsch said in an interview with Die Welt yesterday.
The bank is waiting for details of the transaction before deciding on which option it will choose as part of the rescue, Die Welt cited Kirsch as saying. Martin Roth, a spokesman for Frankfurt-based DZ Bank, confirmed the comments today.
LBBW spokesman Alexander Braun said the lender is analyzing the documents it received. He declined further comment.
--With assistance from Aaron Kirchfeld in Frankfurt. Editors: Angela Cullen, Frank Connelly
