BRUSSELS: The leaders of France and Germany, President Nicolas Sarkozy and Chancellor Angela Merkel, will Wednesday talk in person to world bankers to negotiate a reduction in Greek debt, a senior government source said Wednesday.
"They want to speak to the banks this evening," said the source, who is close to the negotiations but spoke on condition of anonymity.
The source said Europe would not rule out arm-twisting the bank lobby, whereas previously all the emphasis had been on securing "voluntary" agreement so as to avoid triggering credit default insurance clauses.
The EU wants banks to take a write-down of 50-60 percent on their holdings of Greek government bonds, targeting a 100-billion-euro reduction in the 350-billion debt mountain in Athens.
One top French governmental source said a "plan B" that would see Greece face a formal debt restructuring was an alternative, if a suitable deal for taxpayer-funded bailout partners cannot be found.
The idea is that the ratio of Greek debt-to-GDP falls from the current 160 percent to 120 percent, still way about the EU 60 percent limit but more manageable.
Germany has been militant in pressing for a bigger haircut, while France had erred on the side of the European Central Bank which warned of the risk that banks could suddenly withdraw funding from other vulnerable eurozone governments.
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