The Hellenic Financial Stability Fund (HFSF) was established in 2010, in order to contribute to the maintenance of the financial stability of the Greek banking system for the sake of public interest and preserve the value of its holdings, without interfering in the day-to-day management of the banks (Law 3864/2010). As per its founding law, HFSF is established as a private legal entity and does not belong to the public sector. It has administrative and financial autonomy, operates exclusively under the rules of the private economy and is governed by the provisions of the founding law as applicable.
Although the capital of HFSF is paid by the Ministry of Finance and HFSF is a subsidiary of the Hellenic Corporation of Assets and Participations (HCAP), its independence in decision making and management of its investments, is safeguarded by the provisions of its founding law.
HFSF’s operational focus evolves in line with its mission, so the focus and the current mission requires a shift to a more commercial perspective. Hence, from its shareholder role, HFSF strives for a healthy and profitable banking system whilst ensuring financial stability. The Fund wants to ensure that the banks’ underlying strategy, is based on clear, unique value propositions, in-line with the Bank’s risk appetite and prudent corporate governance practices, whilst its vision remains and is driven, by increasing shareholder value and protecting Greek tax payers money.
Within the context of financial stability, since its establishment and until October 2020, HFSF has actively supported the stability of the Greek banking system, through a number of actions and initiatives, including the recapitalization of the systemically important banks in 2013 and 2015 with an amount of € 31 bn, injection of €1,4 bn capital to transitional financial institutions, the funding of the bad banks’ gap with a contribution of € 13,5bn, the issuance of Cocos for NBG and Piraeus Bank both in the amount of €2 bn; being the most notable examples. But this extraordinary financial support was only part of HFSF’s activities, while assisting in reducing the burning NPL/NPE drain on the balance sheet of the four systemic banks, representing another challenging focus of the HFSF. Other initiatives of the HFSF include the identification of the non-regulatory constraints and impediments that lead to the development of a dynamic NPL market in Greece, the proposed NPL resolution action plan to enhance coordination among banks and accelerate the restructurings of large corporate NPLs, as well as, a joint initiative with the MinFin, for the introduction of an asset protection scheme which foresees securitisations of NPL/NPEs partly backed by the Hellenic Republic (the so called “Hercules”). Another successful undertaking, aimed at gradually improving the corporate governance framework and board performance of the systemic Greek banks. As part of its strategic objectives on that front HFSF, in cooperation with the Greek systemic banks, have successfully transformed boards’ membership and have succeeded in bringing international experience in the boards. Within 2018, HFSF has also published revised guidelines to improve their board nomination policies, whilst ensuring a formal and transparent selection and appointment process for board members. Upon the initiative of HFSF, banks started setting up Ethics Committees in 2018.
In line with the objectives of the Fund and its role as a shareholder, HFSF aims to manage its holdings prudently. In this respect, the Fund has already engaged more actively in the strategic objectives setting of the four systemic banks; with the aim to ensure that Shareholder’s value is significantly enhanced under the leadership of the Banks’ Boards and Executive Management Teams. The HFSF wants to ensure that the Bank(s) underlying strategy, is based on clear, unique value propositions, in-line with the Bank(s) risk appetite and competitive advantage position.