ATHENS – Greece's biggest banks asked their boards to approve selling back as much as their entire holdings of national debt, banking sources said on Friday, putting Athens on track to meet a target set by its international lenders.
The buyback scheme, in which investors must declare their interest by Friday, is central to efforts by Greece's euro zone and International Monetary Fund lenders to cut its debt to manageable levels by 2020.
Athens has pressured its banks, which hold an estimated 17 billion euros ($22 billion) of bonds out of the 63 billion eligible for the buyback, to sell and promised to shield them from any lawsuits by shareholders over losses from the scheme.
The government has no plans to extend the deadline for bids beyond Friday, finance ministry officials said, dismissing a Greek newspaper report suggesting the deadline could be extended to early next week.
The country's four biggest banks have each asked their boards to approve up to 100 percent participation in the deal ahead of the 1700 GMT deadline, two banking sources said.
"The proposals by banks to their boards were positive on the buyback offer, asking for approval to participate by up to 100 percent," said one banker, who declined to be named.
Board approval does not necessarily mean the banks will offer all of the Greek bonds they hold.
"All proposals (to bank boards) were positive, saying the offer is beneficial," the second banker said.
The buyback is part of a broader debt relief package worth 40 billion euros ($52 billion) agreed by Greece's euro zone and International Monetary Fund lenders last month.
Under the scheme, Athens aims to spend 10 billion euros of borrowed money to buy back bonds far below their nominal value, in a bid to cut debt by a net 20 billion euros.
Athens made the offer on Monday on more attractive terms than expected for investors, boosting expectations that enough bondholders will take part to ensure the deal is a success.
Finance Minister Yannis Stournaras, who has told banks it was their "patriotic duty" to ensure the scheme is a success, told local radio Athens would include a provision that protects bank boards from lawsuits from shareholders in case of losses.
"There will be the same provision that was included in the PSI (earlier debt restructuring)," he told Real news radio, referring to the March debt swap where Athens passed a law shielding bank boards from investor lawsuits.
Greek banks - already battered by the country's debt crisis - have been hit further by fears that they would be forced to book losses from the buyback.
But they are expected to participate because most of the more than 30 billion euros that Athens stands to receive in bailout funds once the buyback is completed would be used to recapitalize them.
The price range set for the buyback by Athens varied from a minimum of 30.2 to 38.1 percent and a maximum of 32.2 to 40.1 percent of the principal amount, depending on the maturities of the 20 series of outstanding bonds.
Prime Minister Antonis Samaras has already said Greek pension funds holding more than 8 billion euros of the bonds would not take part, increasing the pressure on the remaining domestic bondholders to do so.
The buyback is the latest in three years of euro zone efforts to resolve Greece's problems. The economy has shrunk by 20 percent in the last five years and unemployment has surpassed Spain's to climb to a record 26.2 percent.
Two in three Greeks have a negative opinion of the pro-bailout government, a survey by Metron Analysis published in the Efimerida Syntakton newspaper showed on Friday.
If elections were held now, the main opposition party SYRIZA would win with 22 percent of the vote over the co-ruling New Democracy party, which would only muster 19.8 percent of the vote, the poll showed.
($1 = 0.7700 euros)
(Editing by Deepa Babington and Ruth Pitchford)