Eurozone FinMins Seal Upping Bank Losses from Greek Bonds

On Friday, the Eurozone approved the next tranche of Greek bailout loans. File photo

All finance ministers from the European Union are meeting in Brussels Saturday to try to find a solution to continuing economic troubles in the Eurozone.

Heads of government are scheduled for a round of talks Sunday. They vowed that they will find a solution by the end of the summit, but now announce there will be another meeting of all of them Wednesday over widespread reports of deep divisions between France and Germany.

On Friday, the Eurozone already approved the next tranche of Greek bailout loans, aimed at rescuing the country from a catastrophic default- a EUR 8 B loan, which has to be signed off by the International Monetary Fund and then made available to Greece in mid-November.

Debt-ridden Greece has been bailed out - twice - along with Ireland and Portugal. The Eurozone is currently working on a third package for Athens.

Meanwhile, Eurozone finance ministers announced Saturday they have reached an agreement that banks should take substantially bigger losses on their Greek bonds, where up to 60% of reductions in the value of assets – the so-called write-downs are a possibility.

Banks have already agreed to take a 21% loss and increasing this percentage is raising concerns about their ability to withstand such damage.

Jean-Claude Juncker, Chairman of the Eurozone and Prime Minister of Luxembourg, is quoted saying Saturday that banks must share "a substantial increase" in Greece's debt burden while UK Chancellor George Osborne has stated that the Eurozone debt crisis is a "real danger" to all of Europe.

Finance ministers from the 27 EU countries, meeting Saturday in Brussels, are further expected to force European banks to raise billions in rainy-day funds.

The moves come in the aftermath of a report from Greece's debt inspectors — the European Commission, the European Central Bank and the International Monetary Fund — which showed that the country's economic situation had deteriorated dramatically since the summer.

Both measures are critical to find a solution not only for Greece, but also for the huge-but-faltering economies of Spain and Italy.

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