April 26 (Bloomberg) -- Greece will have to restructure its debt and should avoid waiting too long to do it, Lars Feld, a member of German Chancellor Angela Merkel's council of economic advisers, said in a Bloomberg Television interview.

'I don't think that Greece will succeed in this consolidation strategy without any restructuring in the future, or perhaps also in the near future,' Feld told Bloomberg Television's Nicole Itano in Frankfurt. 'Greece should restructure sooner than later.'

While there's consensus among most economists that Greece has to restructure, policy makers in Germany are divided and the European Central Bank isn't ready to back such a move, Feld said. Greece's debt will swell to 150 percent of gross domestic product, meaning the country will have to pay as much as 9 percent of its GDP in interest, he said.

Greek government bonds fell, pushing the yield on the two- year security up as much as 64 basis points to a euro-era record of 23.65 percent today, reflecting mounting investor expectations that Greece will renege on its debts. The government in Athens has ruled out a restructuring, saying it would devastate domestic banks and hammer the economy.

Germany 'is currently not willing to support a Greek restructuring and when you look at the ECB and also the German representatives in the ECB, they're not supporting a Greek restructuring as well,' said Feld.

'Worst Case'

A debt restructuring by a euro country risks triggering a banking crisis that in a 'worst case' could exceed the effects of the failure of Lehman Brothers Holdings Inc., ECB Chief Economist Juergen Stark told ZDF German television.

Feld said while the exposure of German banks to highly indebted countries overall is 'relatively high,' the exposure to Greece is 'not so strong' and the domestic banking system should be able to cope with any restructuring.

'I don't think that the private banking sector in Germany is going to have particular problems, and in particular not Deutsche Bank and Commerzbank,' Feld said. Deutsche Bank AG advanced 1.2 percent to 41.60 euros while Commerzbank AG fell 0.1 percent to 4.37 euros at 10:30 a.m. in Frankfurt.

Europe's statistics agency reported today that Greece's 2010 budget deficit was more than a percentage point wider than initially estimated. The shortfall was 10.5 percent of GDP, compared with the 9.4 percent reported in February.

Italy has 'drawn a line under crisis' and Spain will be able to resist the contagion that has spread from Greece to Ireland and Portugal, said Feld. Portugal's two-year yield touched a euro-era record of 11.57 percent today before trimming its advance to 11.47 percent.

'Spain has already done quite a lot. It is not so highly indebted as many other countries in the European Union,' Feld said. 'The large Spanish banks are very healthy and I think the restructuring of the savings banks' has taken place 'to a considerable' extent.

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net