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Thursday, 12 May 2011 - StrasbourgOJ edition

Question no 37 by Rodi Kratsa-Tsagaropoulou (H-000181/11 )  
 Subject: Guarantee packages to underpin the Greek financial system and real economy

In 2008, the Greek Government announced a support package for the Greek financial system consisting of a €5 billion preferred share issue, a €15 billion guarantee package and a €8 billion government bond issue. Subsequently, in 2010, guarantee packages of €15 billion and €25 billion were provided. Following the approval of the Commission, the Greek Government is now seeking the adoption of a further €30 billion guarantee package.

In view of this:

What is the Commission’s assessment to date of the functioning of the Financial Stability Fund (FSF) set up under the Greek economic support mechanism by the euro zone Member States and IMF with a view to stabilising the Greek banking system?

How does it assess its contribution to consolidating the capital adequacy of credit institutions underwritten by the Greek State?

Does it have information concerning the extent to which Greek Government guarantees have been channelled in to the real economy?

Have targets been set regarding the minimum percentage of guarantees to be earmarked for credit growth within the Greek economy?


(EN) The Hellenic Financial Stability Fund (HFSF) is functioning and has already received the first tranche of funding. The Board has been operational since October 2010. To estimate possible future needs for reecapitalisation by the HFSF the Bank of Greece conducts regular solvency forecast exercises for the Greek commercial banks. The HFSF serves as a backstop for the Greek banking sector and stands ready to support it if ever there would be a need for it.

The availabity of the FSF to act as a backstop for banks facing solvency shortfalls has contributed positively to financial stability in Greece. For example, a number of banks were able to raise capital from private investors (NBG, Piraeus) despite challenging circumstances. A number of banks have enhanced their capital adequacy through deleveraging (Eurobank, Alpha).

The new tranche of EUR 30 billion in Government Guaranteed Bank Bonds was approved in order to further enhance the the liquidity cushion in the system called for on account of deposit outflows and erosion of collateral pledged with the Eurosystem that is due to market volatility, downgrades of the sovereign debt and changes to the ECB collateral rules. The banks access to the new tranche is conditional on the adoption of medium-term funding plans, outlining bank-specific targets and measures to reduce reliance on the Eurosystem liquidity. At the same time, these plans have to be consistent with the macro-economic and fiscal frameworks under the Programme and the restructuring plans requested under the EU State aid rules.

According to the information made available to the Commission no such targets have been set. Credit growth in Greece, however, is assumed to be in line with the macro-economic framework of the Programme.

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