The Hellenic Financial Stability Fund (HFSF) was established in 2010, with the objective of contributing to maintain the financial stability of the Greek banking system in the public interest (Law 3864/2010). The independence of the fund in decision-making and in the management of its investments is guaranteed by the provisions of the founding law.
In the summer of 2015 and under the new MoU (third program) of the Greek State signed on 19 August 2015, a buffer of up to €25 billion was constituted to cover the potential recapitalization needs of viable banks and the liquidation costs of non-viable banks in full compliance with EU competition and state aid rules.
Since its establishment, the HFSF has actively supported the stability of the Greek banking system through pioneering measures and initiatives, notably the recapitalization of the systemically important banks in 2013 and 2015 with an amount of €27 billion, the capital injection of €1.4 billion into transitional financial institutions, the financing of the funding gap of banks under liquidation with a contribution of €13.5 billion, the acquisition of Cocos issued by NBG and Piraeus Bank, both in an amount of €2 billion.
Since 2016, the HFSF has been a direct subsidiary of the Hellenic Corporation of Assets and Participations (“HCAP”), but the administrative autonomy and independence of the HFSF is maintained under the provisions of the Founding Law 4389/2016 of the HCAP.
The HFSF has made significant contributions to the consolidation and stabilization of the Greek banking system against a background of significant macro and microeconomic challenges. Concerted efforts by Greek and European Institutions have ensured the stability of the banking sector in turbulent times, no customer deposits were lost and confidence in the banking system is slowly returning.
Moreover, the Financial Assistance Facility Agreement, which was signed (and became law) between the European Stability Mechanism and the Hellenic Republic, the Bank of Greece and the Hellenic Financial Stability Fund, provides for a number of general, security and information engagements until all Financial Assistance has been fully reimbursed and all interest and additional amounts (if any) due under the Agreement have been paid in full.
Helping the four systemic banks to accelerate the reduction in NPEs is among the principal challenges for the Fund. The main initiatives of the HFSF have been the identification of the non-regulatory constraints and obstacles to the development of a dynamic NPL market in Greece, the proposed NPL resolution action plan to enhance coordination between banks and accelerate the restructuring of the large corporate NPLs, and, importantly the Fund’s recent significant contribution to the development of an asset protection scheme, which involves the securitization of NPEs partly guaranteed by the Hellenic Republic. This project was adopted and promoted by the Greek Ministry of Finance under the name Hercules Scheme and was approved in 2019 by the Greek Parliament.
Another major undertaking concerned the changes in the composition of Boards of Directors of the systemic banks in accordance with the relevant law, which was aimed at improving the corporate governance framework and board performance of the Greek systemic banks.
The HFSF is working with the banks on a strategic initiative within the framework of its active shareholder role to prepare them for the forthcoming changes in the banking landscape and to identify key areas where they can generate sustainable earnings and profitability in the future. The HFSF will enter a new phase once the sector has stabilized and the restructuring plans of DG Comp have been completed, which will gradually lead to the divestment of its shareholdings.
The vision of the Hellenic Financial Stability Fund is to contribute to the maintenance of the stability of the Greek banking system, for the sake of public interest.
- Provide capital support to credit institutions under the current HFSF Law in accordance with European Union (the “EU”) state aid rules.
- Monitor and assess how the credit institutions that receive capital support from the Fund are complying with their restructuring plans while preserving the business autonomy of the credit institutions. The Fund ensures that such credit institutions operate on market terms and that private sector participation in them is encouraged providing any procedure is transparent and complies with the EU state aid rules.
- Exercise the rights resulting from its participation in the credit institutions to which the Fund provides capital support, as defined in the applicable HFSF Law and in the Relationship Framework Agreements concluded with these credit institutions.
- Dispose, in whole or in part, of financial instruments issued by the credit institutions in which it holds an interest.
- Lend to the Hellenic Deposit and Investment Guarantee Fund.