Banker Announced As New PM Of Greece

A senior banker will succeed George Papandreou as the Greek prime minister, taking on the responsibility of pulling the debt-ridden country out of economic crisis.

Former European Central Bank vice-president Lucas Papademos will be sworn in to the top job at lunchtime on Friday.

News of his new post comes a day after a coalition government was formed following three days of intense power-sharing talks between the two main political parties.

The move was announced by Prime Minister George Papandreou who is stepping down as leader to make way for the new administration.

Parliament speaker Filippos Petsalnikos, 60, was initially tipped to lead the interim government but it has been announced Mr Papademos, 64, will take on the role.

Speaking soon after the announcement, Mr Papademos admittedhe had a tough job ahead of him and that the country was at a "crucial crossroads".

"The Greek economy is facing huge problems despite the efforts undertaken," he said.

"The choices we will make will be decisive for the Greek people. The path will not be easy but I am convinced the problems will be resolved faster and at a smaller cost if there is unity, understanding and prudence."

In an address to the nation on Thursday, outgoing leader Mr Papandreou wished the new government well.

He said: "I am proud that, despite the difficulties, we avoided bankruptcy and ensured the country stayed on its feet.

"I would like to wish every success to the new prime minister and of course the new government. I will stand by them and I will support them with all my strength."

He added Greece will now implement the £110bn (130bn euro) rescue package on offer from Europe and do its utmost to stay in the euro.

Approval of the deal will allow the release of an £6.88bn (8bn euro) loan instalment, without which the country will go bankrupt before Christmas.

Mr Papandreou's statement came after intense negotiations between his socialist PASOK party and the opposition conservatives, led by Antonis Samaras.

The latest crisis in Greece was triggered by Mr Papandreou's surprise announcement last week that he would hold a nationwide referendum on the rescue package.

It prompted an angry backlash from European leaders who had hammered out the agreement barely a week before.

Mr Papandreou also faced a revolt from his socialist party colleagues.

He later withdrew the referendum plan after Mr Samaras indicated he would support the debt deal.

The squabbling in Athens came as another threat emerged to the euro with the borrowing costs of Italy, one of Europe's largest economies, hitting historic highs.

It happened despite Prime Minister Silvio Berlusconi pledging to resign after MPs passed economic reforms demanded by the EU to keep the Italian economy afloat.

Both Italy and Greece are under intense pressure to reassure financial markets they are tackling their massive debts, which are threatening to sink the 17-country eurozone.

US Treasury Secretary Timothy Geithner said the two countries were belatedly moving forward with recovery plans.

"I think they're making progress," Mr Geithner said. "It's not as fast as the world needs, but they're making progress.

"We're doing everything that we can to encourage them to move more quickly and where we can help them, we're going to help them."