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ESM approves 2.71 bln euros for recapitalization of Greece National Bank

Xinhua, December 8, 2015 Adjust font size:

The European Stability Mechanism (ESM) board of directors decided on Tuesday to release 2.71 billion euros (2.95 billion U.S. dollars) to recapitalise National Bank of Greece.

This amount will be subtracted from the funds designated to cover potential resolution and recapitalization costs of the banking sector, part of the ESM financial assistance granted to Greece in August.

"With the recapitalization of NBG, the four systemic banks in Greece should now all be able to stand on their own feet again," said Klaus Regling, Managing Director of the ESM.

"An important contribution from the private sector has also helped strengthen the stability of the banking sector, a key objective of the third assistance program to Greece," Regling added.

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 euro shortfall at NBG.

In recent weeks, NBG has covered 1.5 billion euros of that gap by private means and 120 million euros 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 NBG 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 euro shortfall.

ESM said future releases of funds will be decided on a case-by-case basis. Endit