Vienna, 27 October 2011 Fekter: Europe has shown it can take tough decisions Key questions on private sector involvement and the EFSF protective shield resolved

Vienna - "Europe showed last night that it can take tough decisions", commented Finance Minister Maria Fekter in her first statement on the outcome of the summit meeting which has just ended. With the resolutions passed by the heads of state and government endorsing the groundwork laid by the finance ministers, the two key issues of the involvement of private sector creditors in Greece ’ s debt crisis and a more efficient use of EFSF resources were resolved.

"Now that Greek sovereign debt has been written down by 50%, nothing stands in the way of the ambition to put Greece's financing on a solid footing," asserts Fekter with conviction. "Greece must now continue to work intensively and systematically at its reform and privatisation programmes, in order to be able to regain the trust of the markets in the long term. The country's European partners have assured Greece of their continuing support to this end," Fekter continued.

"The strength of the European Financial Stabilisation Facility (EFSF) will be significantly improved thanks to the leverage effect, without the need for the Member States to have to increase the level of their guarantees," said Fekter, also welcoming the decisions taken on the EFSF. Thanks to two leverage options, countries needing to avail themselves of EFSF aid can, depending on their situation, size and financing need, now do so on a more market-oriented basis. This will be made possible though the involvement of additional capital lenders or through risk hedging. In this way the protective shield could potentially be raised to around EUR 1 trillion.

As an accompanying measure in the interim, system-relevant banks will be required to raise their Tier 1 capital levels to 9%. For Austrian credit institutions, this means provisionally an additional capital requirement of EUR 2.9 billion, although a significant proportion of this is pro forma, since restructuring measures have already been implemented. Significantly, the volume of sovereign risk is low; and the need to make sufficient volumes of credit available to businesses and to consumers has been taken into account. "In talks with the Financial Market Authority (FMA) and the Austrian National Bank (OeNB) we will be establishing the definitive amounts of capital required, as well as discussing with the credit institutions and their proprietors the necessary steps to be taken," said the Finance Minister. "I am convinced that the Austrian banks will deal with these new requirements without difficulty," Fekter declared.

"The results of our discussions show that Europe has opted for a strategy of stability and growth, but that all Member States must now pursue this strategy consistently," Fekter stated. This includes implementing a constitutional debt brake, as adopted by the heads of state and government of the Eurozone countries. "In Austria, I have already put a proposal to the coalition partners to this end," said Fekter in conclusion.