Banks say Greek debt deal to move ahead as planned

(WASHINGTON) - Banks which agreed to write down some 100 billion euros worth of Greek bonds said Tuesday they will proceed as planned even as Athens shocked markets saying the EU rescue would be put to a risky referendum.

The Institute of International Finance, which has negotiated for the banks, "reaffirmed its intention to move ahead with the agreement reached on October 26/27 in Brussels... to reduce the nominal private sector holdings of Greek government bonds by 50 percent."

"We will work closely with the Greek authorities, euro area officials and other relevant parties to agree on, finalize and move toward implementation of the details of the voluntary Private Sector Involvement in support of Greece's reform effort," the IIF said in a statement.

The statement came after Greece Prime Minister George Papandreou stunned markets and the countries and organizations that have organized the country's massive bailout by saying he would seek a confidence vote and a referendum to approve last week's EU summit deal on the rescue.

The IIF-led banks agreed to write down the Greek sovereign debt they hold by about 100 billion euros ($137 billion) as one of the components of the deal, which also involves a huge new loan for Athens, vastly strengthening the EU emergency fund, and recapitalizing banks.

If the confidence vote and/or the referendum go against Papandreou, it could undermine the entire package and force Greece into default.