Three banks in Illinois, Colorado close: FDIC (Reuters)

WASHINGTON (Reuters) – U.S. authorities closed three banks on Friday, bringing the total number of foreclosures in 2011 to 51.

First Chicago Bank & Trust of Chicago, Illinois, with just under $960 million in total assets, was closed, the Federal Deposit Insurance Corp said. Northbrook Bank & Trust Company of Northbrook, Illinois, will assume all of the deposits of First Chicago's seven branches.

FDIC also said Colorado Capital Bank of Castle Rock, Colorado, was shut and First-Citizens Bank & Trust Company of Raleigh, North Carolina, would assume its deposits.

Colorado Capital Bank of Castle Rock had seven branches and $717.5 million in total assets.

Another Colorado bank, Signature Bank of Windsor, also closed, FDIC said. Points West Community Bank of Julesburg, Colorado, will assume the failed bank's deposits. Signature Bank had three branches and about $67 million in total assets.

The pace of failures is slowing as the banking industry recovers from the 2007-2009 financial crisis. The FDIC expects the total number of failures this year to be less than in 2010.

In 2010, 157 banks failed, following 140 failures in 2009.

Most of the banks that have failed this year have had less than $1 billion in assets as community banks continue to struggle with the weak economy and many are facing problems related to their exposure to the commercial real estate market.

On May 24, the FDIC released quarterly data showing that profits are at their highest level since the financial crisis took hold.

(Reporting by Alina Selyukh; Editing by Gary Hill)

European banks meeting on second Greek bailout (AP)

PARIS – The biggest banks in the eurozone met Wednesday to hash out ways to contribute to any new financial rescue package for Greece, as trouble in Portugal revived worries about Europe's financial health and hit stock markets in Spain and Italy.

The meeting of senior executives from top European banks in Paris ended with no public announcement of a deal, but plans for further discussions in the weeks ahead.

European governments are trying to seal a new bailout package for Greece by September to help the government pay its bills and avoid a default whose effects could ripple worldwide.

Even before a new package is in place, concerns about Greece could cause investors to pull money out of other vulnerable eurozone states, such as already bailed-out Portugal and Ireland as well as much larger Spain and Italy.

Portugal's financial plight deepened Wednesday as the interest it pays on loans jumped higher and its stock market slumped, a day after its government bonds were downgraded to junk status. Stocks fell all round Europe, but especially in Spain and Italy too.

The bankers' private talks in Paris, under the auspices of the Institute of International Finance, ended in the early afternoon, spokesman Frank Vogl said, without revealing what if anything was decided.

"This was seen as part of a series of meetings and there will of course be further meetings," he said.

The bankers' main task is to come up with terms under which they would be prepared to buy up new Greek bonds, currently seen as one of the riskiest investments in the world.

The IIF said in a statement last week that the bankers would discuss a voluntary rollover of Greek bonds, and that the goal is to provide "significant cash-flow support to Greece during 2012-14 on the basis of broad-based voluntary participation by private investors."

Eurozone governments want substantial private-sector contributions to a new rescue deal for Greece, so the whole burden doesn't fall on taxpayers, many of whom are angry at having to bail out a country long seen as sloppy with its finances.

German Finance Minister Wolfgang Schaeuble insisted Wednesday that the private sector will have to play a central role in the new Greek aid package and noted that Europe's biggest economy was prepared to work on the basis of a recent proposal from French banks.

Under the French proposal, banks would reinvest 50 percent of their holdings in new Greek bonds with a maturity of up to 30 years and being secured by a separate safety fund.

Schaeuble added that "there are also a lot of arguments for alternatives, and we will have to discuss that calmly but thoroughly by September." He didn't elaborate.

France's new Finance Minister Francois Baroin said Wednesday that a plan worth somewhere in the region of euro100 billion ($144.6 billion) should be ready for September.

Baroin said he will go to Berlin on Thursday for talks with Schaeuble.

The European Commission has said that Greece will need an extra euro115 billion ($166 billion) through the middle of 2014, on top of the euro110 billion ($159 billion) from European governments and the International Monetary Fund granted a year ago — although some of that financing will come from the sale of public assets and the private-sector contribution.

Eurozone governments are keen to make sure that any rollover of Greek debt by the banks is not considered a default by credit rating agencies. No eurozone country has ever been considered to be in default of its debt, and the European Central bank fears that such a negative rating could undermine investor confidence in banks throughout the currency union.

Though last week's decision by the Greek Parliament to back further austerity measures in return for crucial bailout funds has helped calm jitters in the markets, Europe's debt crisis is likely to remain a major concern for investors.

The decision by Moody's to downgrade Portugal to junk status late Tuesday weighed on European stocks and the euro Wednesday. The agency said the country will find it difficult to meet its targets and that it too may need a second bailout.

In Greece, strike action remains a major obstacle to the government's program. On Wednesday, taxis across Greece are holding a 24-hour strike to protest the opening of their profession to more competition.

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Geir Moulson in Berlin and Gabriele Steinhauser in Brussels contributed to this report.

French banks ready for big Greek debt rollover (AP)

PARIS – French banks are ready to help troubled Greece by accepting a significant debt rollover, President Nicolas Sarkozy said Monday, a move that could push other banks to pitch in to the Europe-wide effort to keep Athens from defaulting.

Sarkozy said the plan would see banks reinvest their Greek debt holdings into new bonds over 30 years. That would give Greece valuable funding to manage its huge debt load and buy it time to reform its economy.

French banks are among the biggest holders of Greek sovereign debt — some euro15 billion ($21 billion)_ with Germany's financial sector also heavily exposed, to the tune of euro22.7 billion.

Sarkozy urged others to follow the example of the French plan, which was presented Monday at an international meeting in Rome where banks and financial institutions discussed what the private sector can do to save Greece from default.

The closed-door meeting was organized by the International Institute of Finance and the director-general of the Italian Treasury Ministry, Vittorio Grilli, in his role as president of the eurozone economic financial committee. It ended without a statement.

The LaPresse news agency, without disclosing its sources, said there was "consensus" on renegotiating Greek debt along the lines suggested by French President Nicolas Sarkozy.

A spokesperson for the Treasury Ministry, speaking on the usual ground rule of anonymity, said "no decisions, either formal or informal, were taken. It was just an exchange of views today."

A report in Le Figaro newspaper says that the banks are ready to re-invest, or roll over, up to 70 percent of the Greek sovereign debt they hold. Asked whether the report was correct, Sarkozy said "yes."

"It's a system that other countries could find useful," he said of the plan.

"The idea is that we won't let Greece fall, we will defend the euro, it's in the interest of us all," he told a news conference.

The proposed plan would have the benefit for banks of avoiding a complete rollover of their Greek debt, which is another idea that has been mooted in Brussels in recent days.

According to Le Figaro, half of banks' Greek government debt would be reinvested in new securities with a much longer maturity of 30 years. Another 20 percent would be invested in a "zero coupon" bond, the interest on which would be re-invested in high quality government bonds to provide participating banks a guarantee for their Greek investment.

That would alleviate another stumbling block to finding a Greek solution — Germany's resistance to giving private creditors a European guarantee for their loans to Greece.

A Greek default would have grave consequences on all 17 countries that use the euro and rock markets worldwide. European leaders are trying to get the private sector to take part in a new rescue package under discussion for Greece.

Germany has a greater amount of Greek government debt than France. But France has a larger total amount of Greek debt because of its exposure to Greek private banks, mainly Credit Agricole's ownership of Emporiki Bank.

The finance ministry in Germany, which has pushed hard for private creditors to contribute, said it welcomes proposals from the private sector, as in the French case.

The German government "is still in talks with financial institutes, with banks and insurers, with major private creditors, for example investment funds," ministry spokesman Martin Kreienbaum said. He did not give details.

European countries and the International Monetary Fund put together an original bailout last year for Greece. But persistently high interest rates demanded for its bonds have meant the country needs more help.

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Cecile Brisson in Paris, Geir Moulson in Berlin and Victor Simpson in Rome contributed to this report.

Sarkozy says banks accept Greek debt rollover (Reuters)

ATHENS/PARIS (Reuters) – French banks have agreed to roll over holdings of Greek debt for 30 years, President Nicolas Sarkozy said on Monday, as the Greek government fought to persuade backbench rebels to back a crucial austerity plan to avert bankruptcy.

With financial markets watching the Greek crisis anxiously, Sarkozy told a news conference in Paris that the French authorities had reached an agreement with the banks on a voluntary rollover of maturing bonds.

"We concluded that by stretching out the loans over 30 years, putting (interest rates) at the level of European loans, plus a premium indexed to future Greek growth, that would be a system that each country could find attractive," he said.

Banking sources confirmed that was part of an outline deal under which banks would reinvest 70 percent of the proceeds when Greek bonds fall due. Of that amount, 50 percent would go into the new 30-year bonds and 20 percent would be reinvested in a zero-coupon guaranteed fund based on high-quality securities.

European Union officials were discussing the French idea with international bankers and the Institute of International Finance (IIF) in Rome on Monday, euro zone sources said, and German banks voiced interest in the "French model.

Any new financial rescue for Athens, including official lending and private sector participation, depends on the Greek parliament approving this week a five-year austerity plan and legislation to implement structural reforms and privatizations.

Greek Finance Minister Evangelos Venizelos met ruling socialist party (PASOK) rebels in Athens to push them to toe the line in parliamentary votes on Wednesday and Thursday, where a defeat could plunge the country into default.

Greece's conservative opposition has rejected calls for national unity, forcing Prime Minister George Papandreou to rely on his slim parliamentary majority to push through a painful mix of spending cuts, tax hikes and state selloffs.

However with Greece stuck in deep recession, at least three PASOK deputies have expressed serious reservations or outright opposition to a plan they say will crush any hope of growth for years to come and it is unclear how the numbers will play out.

Without parliamentary approval for the measures, which have caused a wave of strikes and demonstrations, the European Union and International Monetary Fund say they will not release the fifth tranche of the 110 billion-euro bailout agreed last year.

If the 12 billion-euro tranche is not forthcoming, the Greek government, which has been shut out of financial markets because of the ruined state of its public finances, will run out of money within weeks, probably triggering a Europe-wide crisis.

PREPARATIONS

Venizelos was due to meet wavering deputies throughout Monday in a last-ditch bid to ensure the votes pass after German ministers warned that Europe had to make plans for the event of a defeat which would block the next tranche of aid.

"(Rejection) isn't Plan A, or the most likely outcome but the euro zone and its financial sectors need to make preparations," Deputy Finance Minister Joerg Asmussen told a conference on Monday.

In a sign of growing nervousness on financial markets, the premium investors demand to hold Greek debt rather than benchmark German bonds widened by 20 basis points on Monday to 1,432 basis points.

The debate in parliament is due to begin on Monday evening with an initial vote on the framework austerity package due on Wednesday, and lawmakers then voting on Thursday on a separate bill containing specific steps to implement it.

Defections over the past 13 months have cut Papandreou's support in the 300-member parliament to 155 seats, meaning a handful of votes could decide the issue, which may be further complicated if one bill passes and the other does not.

In an interview with Spanish daily El Mundo on Sunday, Deputy Prime Minister Theodore Pangalos said he believed the first vote would pass but he was less confident about the second implementation bill.

"That's where we may have problems," he said. "I don't know whether some of our legislators will vote against it."

BAILOUT INSUFFICIENT

With the current 110 billion bailout insufficient to keep Greece going, European leaders are working on a further package of a similar size including a contribution from private banks which would agree to a "voluntary" rollover of their Greek debt.

Whether such a deal will be enough to stave off problems in the longer term remains uncertain. Many investors and economists believe that even if the austerity package is passed this week, it will merely delay an inevitable restructuring or default.

With the fate of both the existing aid plan and the new package dependent on this week's vote, major rallies are planned by the protestors who have been occupying Syntagma Square outside the Greek parliament in Athens for the past month.

Public anger has been fueled by Greece's worst recession since the 1970s, a youth unemployment rate of more than 40 percent and public finances that have been shattered by a debt equivalent to some 150 percent of gross domestic product.

The powerful public sector union ADEDY and its private sector equivalent GSEE are due to hold a 48-hour strike on June 28 and 29, that will hit public transport, telecoms, the post office and many hospitals.

Many companies, including the main electricity group PPC which is slated for partial privatization next year, have already started rolling stoppages.

On Monday, protestors hung a huge banner off the Acropolis, the ancient rock outcrop which dominates Athens, proclaiming: "People have the power, they never surrender."

(Writing by James Mackenzie, editing by Paul Taylor)