Finland’s parliament will probably approve the second Greek bailout this week, said Miapetra Kumpula-Natri, chairwoman of the legislature’s Grand Committee.
“The main elements are in place,” Kumpula-Natri said today in phone interview, citing the 130 billion-euro ($173 billion) size of the rescue and a collateral agreement for the loan. The government plans to introduce the measure to parliament on Feb. 24, Anita Sihvola, a spokeswoman at the Finance Ministry, said by e-mail.
Greece won a second bailout today after Europe’s governments wrung concessions from private investors and tapped into European Central Bank profits to prevent a default. The final hurdle for Finnish approval was cleared yesterday as it signed an accord with Greece on collateral, which the Nordic country had pushed for as a prerequisite to help its debt- burdened euro colleague. The government’s majority in parliament will help push through the agreement, Kumpula-Natri said.
Prime Minister Jyrki Katainen’s cabinet is backed by a majority of 124 lawmakers, who must vote to uphold the coalition or face penalties. Lawmakers who fail to comply may be ejected from their party’s parliamentary group, the main forum for their work in the legislature. Parliament has 200 seats, including the speaker who doesn’t vote.
“This has been the method used for previous votes,” Kumpula-Natri said. “The government has indicated this will be the case and all six parties that are in government are in agreement. I don’t expect any surprises.”
Finland was the only country to take the collateral deal reached in October after more than four months of talks. Under the accord, Greek bonds will be transferred from Greek banks to a trustee, which will sell them and invest the proceeds in AAA rated bonds with maturities of 15 to 30 years. In exchange, Finland pays upfront its share of the capital of the permanent rescue fund, the European Stability Mechanism.
The amount of collateral is determined based on the final size of the bailout, the Finance Ministry said on its website.
The spread on Finland’s 10-year bonds and similar-maturity German bunds was little changed, widening 0.3 basis points to 45.1 basis points at 3:43 p.m. in Helsinki. One basis point is 0.01 percentage point.
While Finland requires collateral for all rescue loans paid from the temporary rescue fund, the European Financial Stability Facility, Finance Minister Jutta Urpilainen said Dec. 21 the country will forgo extra security for any lending from the permanent rescue fund, the ESM.
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