ECB remains divided over Greek bond plan (Reuters)

FRANKFURT (Reuters) ? The European Central Bank remains no closer to agreeing on whether or not it will take losses on the Greek bonds it owns, euro zone central bank sources said on Thursday.

Policymakers were widely split on the issue at a late night meeting on Wednesday, the sources told Reuters.

The ECB owns roughly 40 billion euros worth of Greek bonds and is now under pressure to join in with banks and others in the private sector that lent to Greece that are being asked to take write downs to help stabilise the country's finances.

According to two high level euro zone central bank sources,

ECB policymakers remained divided on the issue of losses or alternatives such as accepting back what it paid for the bonds rather than their full value.

"The ECB has not agreed on a position," said one of the sources, adding that "the discussion on how to deal with the Greek debt holdings is not yet over."

An ECB spokesman declined to comment.

The ECB's holdings of Greek bonds are the product of a controversial emergency program introduced in May 2010 aimed at stopping the debt crisis spiraling out of control.

ECB sources say the bank paid 38 billion euros for the bonds, 12 billion euros below their 50 billion euro face value, a number that an EU source said on Wednesday would roughly match what is needed to plug a recently opened up shortfall in Greece's debt deal.

Speculation that the ECB is considering taking losses on the bond as part of broader moves to stabilise Athens's finances was sparked earlier this month when ECB President Mario Draghi repeatedly avoided questions on the issue at the bank's monthly news conference.

Athens has long been in talks with private creditors on a voluntary debt swap deal that would wipe 65-70 percent off the face value of its bonds.

The International Monetary Fund is increasingly concerned whether the program will bring Greece back on track. As a result, the fund is pushing for further contributions by the public sector.

Greece has also threatened to force losses on private investors if fewer than expected sign up to the deal voluntarily, raising questions about where it would leave the ECB.

(Reporting by Eva Kuehnen, Marc Jones and Andreas Framke. Editing by Jeremy Gaunt.)

Source: http://us.rd.yahoo.com/dailynews/rss/eurobiz/*http%3A//news.yahoo.com/s/nm/20120126/bs_nm/us_ecb_bonds

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