(REUTERS) -- Greece resumes tortuous negotiations on a debt swap with private creditors in Athens on Thursday, with all eyes on the European Central Bank after IMF chief Christine Lagarde said public sector holders of Greek debt may need to take a haircut too.

Athens, which needs a deal in the coming days to avert a messy default when a major bond redemption comes due in March, hopes the talks can be wrapped up this week.

The private creditors' top negotiator Charles Dallara is scheduled to meet Prime Minister Lucas Papademos at around 1 p.m. ET in Athens after experts meet to discuss technical details.

International Monetary Fund Managing Director Christine Lagarde put pressure on the ECB on Wednesday, saying it and other public creditors may need to accept losses if those taken by the private sector are not enough to bring Greece's debt burden down to a sustainable level.

Private sector creditors want others who lent money, and in particular the ECB which is Athens' single biggest creditor, to also take part in a deal. We are ready to make an effort if everyone else (including the ECB) makes an effort, a source close to the talks said.

Another source familiar with the negotiations said the coupon is parked for current time until we can get closer on detail of overall package. Asked if an overall package would include the ECB, the source said: We would expect it to, still to be determined though.

Greek bankers and government officials said they have not heard of any new proposal from the creditors' top negotiators, after local media reported that private bondholders were willing to improve their final offer of a four percent interest rate to clinch a deal in time to avert a messy default.

Until last week, we knew that the steering committee was authorized to concede up to 3.8 percent for the average coupon, one senior Greek banker told Reuters.

But things are once again up in the air. You have to deal with politicians and 15 different governments asking for different things. We haven't got anything clear from the IIF yet, discussions start today.


The interest rate on the new bonds has been the main stumbling block in the negotiations, with the IMF, Germany and other euro zone countries insisting it must be low enough to ensure that Greece's debt will be back on a more sustainable track by 2020.

The talks hit a hurdle after euro zone ministers rejected the creditors' offer for a 4 percent coupon on new bonds to be issued by Athens, increasing the chance that the latter would have to enforce losses.

Discussions on technical and legal issues on the bond swap pertaining to the documents and the GDP warrants will start in the afternoon, a government official close to the talks told Reuters. Talks with IIF's Dallara on the coupon will take place in the evening, the official said.

Several Greek media wrote on Thursday, without naming their sources, that the private creditors were planning to make a new offer of around 3.75 percent. One daily, Kerdos, said participation of public sector creditors including the ECB in the swap deal was a pre-condition for that offer.

The ECB has ruled out taking voluntary losses on its Greek bond holdings but is now debating how it would handle any forced losses and whether to explore legal options to avoid such a hit, central bank sources told Reuters on Wednesday.

One source close to talks among ECB policymakers said that while France, Italy and the ECB board in Frankfurt were against accepting losses, some national central banks, which have expressed reservations over the bond purchases from the start, now accepted that losses may be unavoidable.

The ECB will not take losses on its Greek bond holdings voluntarily ... but there is a fierce debate within the ECB on how to handle forced losses, the source said.

The Institute of International Finance, which Dallara heads, said Thursday's discussions would be informal and aim to sort out all legal and technical issues quickly.

Dallara left Athens over the weekend after the last round of talks proved inconclusive.

The chairman of BNP Paribas, one of the banks on the committee leading talks for creditors suggested on Wednesday that bondholders would not retreat from their position easily.

Senior EU, IMF and ECB officials are holding talks with the Greek government in parallel with the debt swap talks, to flesh out a new 130-billion euro bailout for Greece. They have warned they need the debt swap to cut Greece's debt substantially in order to go ahead with the new loans.

But Germany does not expect the troika of foreign lenders to deliver a report on Greece's progress before a summit of European Union leaders on Monday, a senior German official said on Thursday, adding that this meant that Greece would not play a major role at the EU leaders summit.

(Additional reporting by Sarah White, Sophie Sassard and Tatiana Fragou; Writing by Ingrid Melander)