EU Commission: euro zone assessing Finnish-Greek deal

BRUSSELS Fri Aug 19, 2011 7:32am EDT

BRUSSELS (Reuters) - Euro zone member states will have to decide if a deal between Finland and Greece on collateral for financial support to Athens is in line with the agreement on the bailout agreed last month, the European Commission said on Friday.

Euro area member states agreed at a July summit to allow a collateral agreement for helping Greece to be put in place "where appropriate," Commission spokesman Amadeu Altafaj told a regular briefing.

He said euro zone states were considering the Finnish-Greek agreement to secure cash backing on loans made to Athens under the bailout plan.

Austria, the Netherlands and Slovakia said on Thursday they also wanted collateral on their loans, which an official in Athens warned would undermine the second bailout deal agreed for Greece last month.

"The euro are member states will have to assess the outcome of this bilateral discussion between Finland and Greece... Discussions are already taking place. And therefore we have no further comment at this stage but the issue is already being examined," Altafaj said.

A senior Greek government official said on Thursday Athens was not talking about collateral with countries other than Finland, with which it reached agreement on Tuesday this week.

Altafaj said the European Commission wanted the practicalities of last month's summit agreements to be finalized by the end of this month, but that there was no concrete deadline.

"It's obvious that the sooner you provide clarity about these issues, the more you contribute to restore confidence among all market participants about the boldness of our response to the current challenges, and in particular the challenge of the sustainability of the Greek debt," he added.

(Reporting by Charlie Dunmore and Justyna Pawlak, editing by Rex Merrifield)

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