FRANKFURT Commerzbank's (CBKG.DE) chief executive said on Thursday he expected all Greece's sovereign bondholders to be asked to take a further haircut, including those like the European Central Bank which refused to participate in an earlier debt swap deal.
"We will eventually see another debt haircut on Greece, in which all creditors will have to participate," Martin Blessing said at a conference in Frankfurt.
In March, Greece averted the immediate threat of an uncontrolled default on its sovereign debt after a large majority of private creditors agreed to a bond swap deal.
At the time, these investors agreed to swallow a loss of about three-quarters on their Greek bonds by swapping them for new 30-year debt paying lower interest rates, a move that cut Greece's debt burden by about 100 billion euros.
The European Central Bank (ECB) declined to participate, arguing that it was not a private sector creditor.
But Greece is seen to be way off-track in improving its finances and further aggressive action is needed to keep the country inside the euro zone.
"The sovereign debt crisis is not yet overcome," Blessing said on Thursday.
European Union officials said in July that Greece is unlikely to be able to pay what it owes and will probably need a further debt restructuring, a cost that would fall largely on the European Central Bank and euro zone governments.
They described a further restructuring of Greek debt as a last chance to restore the country to solvency, with the agreed goal of cutting its debt to 120 percent of GDP by 2020 already seen as far beyond reach.
The Financial Times Deutschland newspaper, in an article to be published on Friday, quoted euro zone sources as saying a further restructuring could involve governments that provided loans to Greece under its first bailout program from May 2010.
"There is such a discussion," a senior official told the paper.
The IMF and the ECB would not take part in such a haircut, the paper said, noting the Fund's preferred creditor status and the central bank's fears that the move could amount to direct financing of a government, which it is barred from providing.
The ECB has spent about 38 billion euros on Greek sovereign bonds with a face value of 50 billion euros. Some of the euro zone's 17 national central banks - the ECB's stakeholders - also hold Greek bonds on their own accounts. It is not known exactly how much they hold, but estimates are around 12 billion euros.
A small minority of private investors also did not participate in the swap deal, and instead prepared for a legal battle over 9 billion euros ($12 billion) of Greek bonds issued under foreign law.
Commerzbank, Germany's second biggest lender, currently has no Greek sovereign exposure, having held bonds worth about 0.8 billion euros at the end of 2011, 3 billions euros at the end of 2010 and 3.5 billion euros at end-2009.
(Reporting by Arno Schuetze, Eva Kuehnen writing by Edward Taylor; Editing by Catherine Evans)