European Union talks with banks on bondholder losses as part of a second Greek bailout were deadlocked. On the way into the meeting at EU headquarters in Brussels German (NYSE:EWG) Chancellor Angela Merkel stated “work’s not been done yet, but everyone’s coming here today with the goal to progress quite a bit.”
Deals on recapitalizing banks (NYSE:KBE) and bolstering the 440 billion- euro ($608 billion) rescue fund, pivot on pushing Greece back toward financial health. The euro slumped and the currency weakened 0.4 percent to $1.3855 in response to the deadlock. According to a draft summit statement, the Institute of International Finance, outlines a deal to safeguard banks, centering on a June 30, 2012 deadline for lenders to reach core capital reserves of 9 percent after writing down their sovereign debt holdings, emerged. The Institute showed little desire for an EU-run plan. Germany (NYSE:EWG), the biggest contributor of bailouts paved the way for a strengthening of the rescue fund with a Bundestag endorsement in Berlin. In Italy, Berlusconi said he would come to Brussels with a letter of intent on further budget cuts that would provide a rationale for the European Central Bank to continue supporting the Italian bond market, amid reports of a deal to resign in January and hold early elections.
“Either this government is able to take structural reforms or we need another government,” Mario Baldassarri, chairman of the Senate Finance Committee and a former Berlusconi ally, said in an interview in Rome. “We will see in the next few days or week” whether Berlusconi resigns,” according to Bloomberg.
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