German Banks, Insurers Give EU8.1 Billion for Greece (Update1)

By Aaron Kirchfeld

May 7 (Bloomberg) — German financial companies including Deutsche Bank AG and Allianz SE agreed to provide 8.1 billion euros ($10.3 billion) in financing to Greece to bolster the debt-stricken nation, the German Finance Ministry said.

Banks and insurers will make available 4.8 billion euros in financing to replace Greek government bonds expiring by May 6, 2013, by purchasing new bonds or providing other forms of financing, according to a statement distributed by the Finance Ministry today. They will also replace 3.3 billion euros in expiring credit lines with new ones or other financing.

Euro-region governments approved a 110 billion-euro rescue for Greece on May 2 after it became too costly for the country to borrow in financial markets. Deutsche Bank Chief Executive Officer Josef Ackermann, who spearheaded private-sector fundraising, said in a television interview today the package “probably comes a little late” as stocks slumped worldwide on concern Europe’s debt crisis is worsening.

“The represented companies encourage all German credit institutions and insurers to also provide a contribution to positively help Greece’s adjustment process,” the statement said. The banks will also keep their government bonds and neither terminate nor reduce existing credit lines to Greece and Greek lenders for at least the next three years, the length of the rescue package from the European Union and the International Monetary Fund, they said.

Loans Approved

Companies that have publicly pledged to support the measures include Deutsche Bank and Commerzbank AG, Germany’s two biggest lenders, DZ Bank AG, HVB Group, Allianz and Munich Re. The country’s banks have 34.4 billion euros and insurers 9 billion euros in exposure to Greece in the form of loans and bonds, according to German financial regulator BaFin.

German lawmakers today approved loans of as much as 22.4 billion euros for Greece, strengthening Chancellor Angela Merkel’s hand as she pushes European allies to be tougher on profligate partners. The upper house, or Bundesrat, where Merkel also commands a majority, will vote after 1 p.m.

The votes come before euro-region leaders meet in Brussels to review the bailout and look for ways to stop the burgeoning crisis. There’s plenty to discuss: The euro dropped to a 14-month low against the dollar yesterday, and the Standard & Poor’s 500 Index plunged to the lowest since March on concern that Europe’s leaders aren’t doing enough to arrest the spread.

–With assistance from Mike Gavin and Jann Bettinga in Frankfurt. Editors: Steve Bailey, Francis Harris.

To contact the reporter on this story: Aaron Kirchfeld in Frankfurt at akirchfeld@bloomberg.net

To contact the editor responsible for this story: Frank Connelly at fconnelly@bloomberg.net
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