European bank shares rise slightly in reaction to eurozone rescue plan
The drastic rescue plan by the IMF may include a 50 per cent write down of Greek debt
Attempts to tackle Greece's debt problems by policy makers in Europe have led to a slight increase in bank shares across the continent.
Stock markets fell heavily last week, but there has been a slight recovery following reports that the International Monetary Fund (IMF) are considering drastic rescue plans.
French banks rose on Monday, with BNP Paribas up 6 per cent and Credit Agricole up 3.5 per cent. Germany's banks are up 4 per cent, while in the UK, RBS rose 2 per cent and Barclays rose 1.8 per cent.
The plan being considered by the IMF may involve a 50 per cent write down of Greece's debt, according to reports. This would mean that private investors in Greek banks might have to accept a 50 per cent reduction in what they are owed.
The plan may also suggest increasing the eurozone bailout fund to €2 trillion (£1.7 trillion), which is four times the current level of the European Financial Stability Facility's €440 billion bailout fund. This would include an arrangement that would allow the European Central Bank (ECB) to lend along-side the fund.
European governments have placed a five to six week timetable on the plan, a reaction to the immediacy of the crisis.
In a speech to the Institute of International Finance on Sunday, the Greek Finance Minister Evangelos Venizelos said that Athens will introduce new measures to fight the debt crisis, which threatens the European economy.
"We are ready to take the necessary initiatives at any political cost," said Mr Venizelos.
But worldwide and particularly European stock markets are expected to remain volatile.
"Markets are likely to remain cautious, even if it appears that European leaders do appear to be finally grasping the fact that the current situation cannot go on forever," said CMC markets analyst Michael Hewson.