June 21, 2011 / 6:29 AM / 8 years ago

German banks' exposure to Greece up to 20 bln -assoc

BERLIN, June 21 (Reuters) - The exposure of German banks to Greece adds up to 20 billion euros at most, the head of the German banking association told a radio station on Tuesday, underlining the banks’ willingness to support another bailout.

Michael Kemmer, the managing director of the German Private Banking Association (BdB), told Deutschlandfunk that the exposure ranged between 10 billion and 20 billion euros.

Even though Greece missed debt targets in the first aid package, euro zone ministers said they were ready to put together a second loan package.

The new plan of around 120 billion euros, due to be outlined by mid-July, will include for the first time, a contribution by private investors, who will be expected to make voluntary purchases of new Greek bonds as existing ones mature.

The BdB represents private sector lenders like Deutsche Bank (DBKGn.DE) and Commerzbank and Kemmer said private creditors would support such steps, but incentives were needed and Greece needed to implements further austerity measures.

“Everybody is aware of their responsibility, everybody is aware that the euro is very, very important, that Greece is very, very important for the euro zone, that it is clearly necessary to launch stabilising measures,” Kemmer said.

To what extend private creditors would share the burden would depend on the conditions, Kemmer told German TV station ARD and urged all parties involved to get together to negotiate a deal.

“Letting Greece default would not be a good decision,” he said, referring to risks of contagion to other euro zone member states and possible distortions on capital markets. Nobody wants a default, Kemmer said. “And it won’t come to that.”

Wolfgang Franz, the head of Germany’s economic advisors, told ARD that a Greek default could somewhat damage Germany’s economic recovery, even though the share of German exports to Greece is “very small”.

“If there are turbulences on the financial markets...this will also to some extent damage the recovery,” he told ARD.

Without a Greek default, Franz said he expects Germany’s economy to grow by “three percent or a little bit more” this year and pointed to slower growth rates next year.

Reporting by Eva Kuehnen; Editing by Ramya Venugopal

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