ECB's Greek profit could ease debt burden: Coeure

Tue Feb 14, 2012 6:53am EST
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PARIS (Reuters) - The European Central Bank's profits from Greek bonds could be used to help restructure Greece's debt, Executive Board member Benoit Coeure said, spelling out how the ECB's funds could play a role in Athens' debt deal.

ECB President Mario Draghi sketched out the plans last week, but Coeure's comments are the clearest signal so far of what the Frankfurt-based central bank has in mind.

The ECB has been under increasing political pressure to play a more direct role in helping stabilize Greece's finances but internal divisions and European rules preventing it from handing money to national governments, have left it with limited leeway.

However, profits made by the ECB are always distributed to the national central banks of the 17 countries that use the euro and they could choose, with national governments, to use the funds to help Greece.

"Should there be a profit (on Greek bonds), like all monetary revenues, it is to be distributed to the (member) states," Coeure, one of the ECB's top policymakers, said in an interview with French daily Liberation published on Tuesday.

"They could use it to contribute to the sustainability of Greek debt," added Coeure, a member of the influential six-man Board, whose members usually reflect the ECB's house view.

According to euro zone sources, the bank owns roughly 50 billion euros worth of Greek bonds as a result of a controversial emergency support program started in May 2010.

It bought the bonds at a discount, however, paying just under 40 billion euros. It means it is sitting on a paper profit of 10-15 billion euros, money which could be directed back to Greece fairly easily.

The process of sending the ECB profits back to Athens would likely be fairly smooth unless Greece's deal with its private creditors falls apart at the last moment and Athens needed to force losses upon them.   Continued...