European Union diplomats say private bankers lending money to Greece have reached an agreement to take a 50 percent loss on the debt.

A formal announcement is expected Thursday.

French President Nicolas Sarkozy, German Chancellor Angela Merkel and IMF chief Christine Lagarde met with the banking lobby late Wednesday in Brussels to press the issue. Private banks earlier agreed to write off about 20 percent of the Greek debt, but they balked at taking a bigger loss.

EU leaders sought to persuade private banks to take a 60 percent loss on the debt.

Earlier Wednesday, eurozone leaders agreed that European banks would have to raise close to $150 billion to recapitalize.

They also plan to increase their bailout fund to $1.4 trillion, but details on how that will be done will not be finalized until next month.

The European heads of state are attempting to resolve a two-year-long debt crisis that in recent weeks has roiled international financial markets fearful of a Greek default on its obligations, and the spread of the debt contagion to bigger European economies in Italy and Spain.

Ms. Merkel told the German parliament earlier Wednesday that it is Europe's “most serious crisis since the end of World War II.”

At her urging, the German lawmakers approved a sharp increase in the continent's bailout fund to assist debt-ridden countries. The parliament voted overwhelmingly to more than double the size of the fund to about $1.4 trillion. That gave Ms. Merkel new clout as she headed to the late-day summit in the Belgian capital.

While the immediate focus has been on debt-ridden Greece, Ms. Merkel and Mr. Sarkozy pressed Italian Prime Minister Silvio Berlusconi to move faster to adopt new economic reforms to stave off the need for an Italian bailout.