Big German banks shun Greek government bonds: report

FRANKFURT (BestGrowthStock) – Eurohypo (NHYGga.H: ) and Hypo Real Estate (WFHGga.F: ), the two most important German banks involved in public financing, will not subscribe to the next round of bonds issued by Greece as Athens battles a debt crisis, the Financial Times Deutschland newspaper reported on Friday.

Deutsche Postbank (DPBGn.DE: ) would also not invest any new funds in Greece, the newspaper said, citing banks and sources.

Greece is preparing for its second bond issue this year, possibly in February or early March. The country needs to raise about 20 billion euros ($26.95 billion) to cover maturing debt in April and May.

Deutsche Bank (DBKGn.DE: ) wants to participate only as an investment bank when it comes to the placement of bonds but the bank itself will no longer buy Greek government bonds, the newspaper said.

It said the bigger state-owned banks Landesbanken, such as BayernLB (BLGGgh.F: ) and Landesbank Baden-Wuerttemberg (LBWGga.F: )) declined comment. But Landesbanken sources said investments in Greek government bonds are hardly imaginable, the paper added.

Greece is the first country in 11 years of European monetary union to require a political pledge of support as fears over its debt spark a market attack that has dented the euro and lifted Greek bond yields, making debt servicing even more challenging.

Markets also have other euro zone countries such as Spain and Portugal in their sights.

The possibility of contagion — the Greek crisis spreading to other euro zone states — is a risk for Germany, whose banks have exposure to these countries, as is the impact the turmoil could have on business confidence.

Greece’s crisis, exacerbated by ratings agency downgrades and market concerns over its solvency, is allowing Germany to press its case for more fiscal discipline in the euro zone, which it has championed from the outset of the project.

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(Reporting by Marilyn Gerlach; Editing by Kim Coghill)

Big German banks shun Greek government bonds: report