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FMS, which is ultimately owned and guaranteed by the German government, was set up last year so that €175 billion of toxic and unwanted assets could be offloaded from the balance sheet of Hypo Real Estate, a German property lender that had invested heavily in sovereign debt. HRE almost collapsed in the financial crisis and needed to be nationalised. Six other German banks and insurers have given a commitment that they will support the bond swap being co-ordinated by the Institute of International Finance, a body representing many banks and financial institutions. However, FMS is the first to quantify its commitment, which it said would involve rolling over 13 bonds with a total face value of €975 million.
FMS said its Greek exposure was almost €8.8 billion. Only bonds set to mature up to 2020 are included in the swap, which offers banks a range of ways to roll over or exchange debt and are set to reduce Athens’ funding costs by €13.5 billion at the targeted 90 per cent take-up rate.
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