Greek banks make plea for more financial support

The true extent of Greece's financial troubles was laid bare today as its finance minister admitted the country's banks have asked the government for more financial support.

Greece's banks have been hit by a flurry of downgrades from international credit rating agencies since its crisis began this year.

They are now finding it increasingly difficult to refinance their loans while at the same time seeing defaults rise worryingly.

Finance minister George Papaconstantinou said the banks have asked to use the remaining funds of a 28 billion (£25 billion) support package first agreed in 2008. About 17 billion remains, mainly in state guarantees.

He today held talks with the International Monetary Fund on how his government would be implementing its austerity plan to deal with its high debts. The talks are against a backdrop of record borrowing costs on the financial markets for the Greek government.

Greece now has to pay 4.09% more in interest on its debt than Germany, reflecting investors' nervousness about potential defaults.

Germany attempted to soothe worries by repeating its line that it has confidence in the measures taken by European leaders to shore up Greece but the finance ministry in Berlin's statements had little impact on the markets.

Shares in the Athens stock exchange were down nearly 2% this afternoon.

Greece has promised to reduce its deficit from an estimated 12.7% of gross domestic product in 2009 to 8.7% this year.