(Reuters) – European finance ministers are considering making banks take bigger losses on Greek debt and have postponed a vital aid payment to Athens until mid-November, setting up a crunch point in the euro zone’s sovereign debt crisis.
Greek Finance Minister Evangelos Venizelos said the country had enough cash to cope until then and insisted that euro zone ministers were not preparing for a Greek default, despite the ominous delay.
“There is no discussion of default,” Venizelos told a news conference on returning to Athens on Tuesday.
Bank shares took a sharp tumble, leading a broader stock market retreat, after the 17 finance ministers, meeting in Luxembourg, called for a review of a July 21 debt swap agreement with private holders of Greek bonds.
The euro hit a nine-month low against the dollar and a 10-year low against the yen. Investors sought refuge in German government bonds, but the cost of insuring even those safe-haven Bunds against default hit another record.
Analysts said the delay in disbursing an 8 billion euro loan installment and the reopening of the private sector deal raised the chances of a default as soon as the currency area has its new financial firefighting tools in place. Greece had previously said it needed the money to pay October salaries.
“If they are having problems getting the sixth tranche of funding, what’s going to happen to the seventh tranche of funding in three months’ time? The situation is going to be even worse then. So Greece is on the brink,” said Nick Stamenkovic, bond strategist at RIA Capital Markets.
Belgium’s cabinet is to meet later on Tuesday to discuss how to shield Dexia from collapse after the Franco-Belgian bank’s board agreed to a break-up to ease a funding crisis caused by the latest turmoil in the eurozone.
The bank’s board has vowed to put its healthy divisions – including Dexia Asset Management and DenizBank, a Turkish retail lender – up for sale to finance its portfolio of souring sovereign and sub-sovereign debt, said people familiar with the outcome of an emergency six-hour board meeting held on Monday.
Deutsche Bank scrapped its profit target for this year, announced 500 job cuts and said that it would take further impairment charges on its holdings of Greek sovereign debt, sending its shares down on Tuesday.
On Tuesday, the spotlight will shift to Tim Cook, Apple Inc.’s new chief executive, as he faces his first public test since taking the reins from Apple co-founder Steve Jobs.
Apple is expected to unveil its next-generation iPhone at an invitation-only event at its Cupertino, Calif., headquarters scheduled to begin at 1 p.m. ET.