The recent recapitalisation of banks in Greece involves the Greek State losing EUR 20 billion and took place under the threat of a ‘haircut’ (bail-in) of deposits. The second bank recapitalisation was undertaken with rock-bottom share prices (ranging from EUR 0.04 EUR to EUR 0.003 a share in the four systemic banks). And existing shareholders practically lost their shares completely owing to the reverse split method used. Ultimately then, for the sum of approximately EUR 5 billion, the banks were acquired by largely unidentified foreign firms of untested reliability, while small-scale investors were curiously excluded from the increase in share capital. Thus, the Troika accepted that the Hellenic Financial Stability Fund (HFSF), which had invested EUR 40 billion, should lose EUR 25 billion in capital and EUR 15 billion as a funding gap. In other words, it agreed that the HFSF – i.e. Greek citizens – should lose EUR 40 billion in 2013, while at the same time demanding an advance of EUR 200-300 million.
Thus through this recapitalisation, existing major shareholders of the banks, both Greek and foreign, institutional and other, pension funds and the HFSF alike, but also small shareholders, lost their money and value of their shares.
In view of the above, will the Commission say:
1. What position has the Commission representative taken on this issue within the Troika?
2. Does the Commission plan to compensate the losses suffered by the HFSF?
Answer given by Mr Moscovici on behalf of the Commission
Following the Comprehensive Assessment of the Single Supervisory Mechanism (SSM), Greek banks proceeded to raise capital from the markets. The legislative framework for the recapitalization of the banks was defined by law 3864/2010, as amended in October 2014. Pursuant to the express provision of Article 7, par. 5 (b) of the said law, the issue price for the actions may be inferior to the price of past acquisitions of shares by the Hellenic Financial Stability Fund (HFSF) or to the current stock market price.
By the time the capital raising started, the share prices of the Greek banks had already decreased by 70-90% compared to the beginning of the year due to the extreme political and economic developments during the first 3 quarters of 2015. This meant that the HFSF (and old private shareholders) had already lost a value of their banking assets of more than EUR 20 billion before the recapitalisation started.
The banks eventually secured either the major part or the totality of the necessary funds from private investors, thus reducing the need for contribution by the Greek taxpayers via the HFSF as capital provider of last resort, in line with state aid rules.
The relevant decisions on pricing were taken by the respective general assemblies of bank shareholders and management. Neither the Commission nor any other Institution had competence or was in any way involved in these decisions.
In view of the above, there is no ground for the Commission to take any action.