Greece said on Friday it would not go ahead with a debt swap crucial to its second bailout if private sector holders of less than 90 percent of the bonds participate, failing to satisfy its international partners.

The statement comes after signs that the debt swap plan is facing delays, with between 60 and 70 percent of bondholders participating so far.

Greece and banking lobby group IIF, which jointly coordinate the debt swap talks, had so far presented the 90 percent participation rate as a simple target and not as a condition.

The condition applies to the holders of Greek bonds maturing by 2014 or 2020, the government said in a letter sent to finance ministers around the world, according to a statement it posted on the web site of the Athens Stock Exchange.

If these thresholds (or either of them) are not met, Greece shall not proceed with any portion of the transaction described in this letter if it determines, in consultation with the official sector, that the total contribution of private sector creditors toward the financing needs of Greece and Greece's debt sustainability resulting from this transaction is insufficient to permit the official sector to support the new multi-year adjustment program for Greece announced on July, 2011, the letter said.

According to two senior Greek bankers who spoke on condition of anonymity, the letter is meant as invitation to banks to declare by September 9 their non-binding interest to take part in the bond swap.

After September 9, there will be a formal invitation to declare binding interest to participate, by early October, one banker said.

According to a second Greek banker, the government has also slightly changed the accounting treatment of the bond value losses to be incurred by bondholders, to make them more favorable for banks.

The IIF downplayed the delay with the scheme on Thursday and said it expected participation would grow as Greece made concrete proposals.

Market players are watching progress on the deal closely, seeing its completion as a key condition for Greece's banking sector to start returning to normal.

(Reporting by Harry Papachristou and Lefteris Papadimas; editing by Patrick Graham)