Pasok, New Democracy Reach Agreement on Banks, Kathimerini Says

Greece’s two biggest parties, Pasok and New Democracy, reached a common position on how the state should recapitalize the country’s banks, Kathimerini reported, without saying how it got the information.

The parties, which both support Prime Minister Lucas Papademos’s interim government, favor recapitalizing banks for losses arising from a sovereign debt swap by issuing them with convertible bonds of three- to five-year duration, the Athens- based newspaper said. If the banks didn’t call the bonds at the end of that period, the debt would be converted to common shares with full voting rights, Kathimerini said.

The manner of the recapitalization is still being negotiated with officials from the European Commission, the European Central Bank and the International Monetary Fund, the newspaper said.

To contact the reporter on this story: Marcus Bensasson in Athens at mbensasson@bloomberg.net

To contact the editor responsible for this story: Craig Stirling at cstirling1@bloomberg.net