ESM releases 2.71 bln euros for recapitalization of National Bank

8 December 2015
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The ESM board of directors on Tuesday decided to release 2.71 billion euros to Greece to recapitalise National Bank of Greece. This amount will be subtracted from the funds designated to cover potential resolution and recapitalisation costs of the banking sector, part of the ESM financial assistance granted to Greece in August, the ESM said in an announcement.

“With the recapitalisation of National Bank, the four systemic banks in Greece should now all be able to stand on their own feet again. Healthy banks play a crucial role in a country’s economic recovery, by providing new loans to businesses. An important contribution from the private sector has also helped strengthen the stability of the banking sector, a key objective of the third assistance programme to Greece,” said Klaus Regling, Managing Director of the ESM.

The European Central Bank’s Single Supervisory Mechanism (SSM) earlier conducted a comprehensive assessment of Greece’s four systemic banks. In this process, it identified a 4.6 billion euros shortfall at National Bank. In recent weeks, the bank has covered 1.5 billioneuros of that gap by private means and 120 million through positive third quarter results. In addition, 302 million euros in preference shares will be bailed in before the bank receives state aid. This means that National Bank has raised sufficient capital to cover the gap identified by the SSM under the so-called baseline, but not the adverse, scenario. The Hellenic Financial Stability Fund (HFSF) will cover the remaining 2.71 billion shortfall.

After the ESM’s disbursements to the HFSF, €4.6 billion remains available from the original 10 billion euros designated for the Greek banking sector. These funds are held in a segregated account at the ESM.

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