Eurozone seals rescue deal as banks agree loss

The eurozone sealed a grand deal to overcome its festering debt crisis Thursday when banks agreed to take a 50 percent loss on Greek debt, officials said. Eurozone officials announced the deal following tough talks in Brussels between leaders of the eurozone and the Institute of International Finance banking lobby to force the private sector to share the pain of Greece's debt burden. The agreement was the last and perhaps toughest chapter to negotiate in a wide-ranging four-point plan to find a lasting solution to Europe's festering debt crisis. IIF head Charles Dallara earlier met French President Nicolas Sarkozy and German Chancellor Angela Merkel on the sidelines of a summit of the 17-nation euro area. Convincing banks to erase billions in Greek debt was a key part of a grand deal leaders had pledged to deliver at a eurozone summit, along with a bank recapitalisation plan and a beefed-up rescue fund to soothe fears of a global recession. The banks had agreed to take a 21-percent "haircut" on the Greek bondholdings as part of a second bailout for Athens agreed at a July summit, but the economic situation has deteriorated since then. Governments wanted the banks to accept a 50-percent "haircut" that would slice off 100 billion euros from Greece's 350-billion-euro debt, but the lenders had offered 40 percent.