EN ECB -PUBLIC  
OPINION OF THE EUROPEAN CENTRAL BANK  
of 11 May 2022  
on the divestment strategy, governance structure  and special rights of the Hellenic Financial 
Stability Fund  
(CON/20 22/18) 
Introduction and legal basis  
On 21 April 2022 the European Central Bank (ECB) received a request from the Greek Minist er for Finance 
for an opinion on a draft law amending the Law on the Hellenic Financial Stability Fund (HFSF)  (hereinafter  
the ‘draft law’) . 
The ECB’s competence to deliver an opinion is based on Articles 127(4) and 282(5) of the Treaty on the 
Functioning of the European Union and the sixth indent of Article 2(1) of Council Decision 98/415/EC1, as 
the draft law  relates to rules applicable to financial institutions insofar as they materially influence the 
stability of financial institutions and markets, and the tasks conferred upon the ECB pursuant to 
Article  127(6) of the Treaty concerning the prudential supervision of credit institutions . In accordance with 
the first sentence of A rticle  17.5 of the Rules of Procedure of the European Central Bank, the Governing 
Council has adopted this opinion.  
1. P
urpose of the draft law
1.1 Divestment -related amendments
1.
1.1  The draft law amends the Law on the HFSF in three main respects.  First, the draft law amends the
Law on the HFSF as concerns the HFSF’s divestment strategy. In this respect, t he draft law elevates 
the divestment of the HFSF’s holdings in credit institutions to a second  main  objective of the HFSF , 
and provides that such divestment must take place within a specific horizon, in a definitive and 
efficient manner and in full, and in principle within the lifetime of the HFSF.  The Executive Board of 
the HFSF ( the ‘HFSF Board ’) is responsible for this  divestment, and the HFSF Chief Executive Officer  
is required to inform the Greek Ministry of Finance on a quarterly basis on the divestment ’s progress.  
1.1.2  The draft law introduces an obligation for the HFSF Board to draft a divestment strategy that must 
contain, inter alia,  both the general schedule for divesting as well as specific milestones for each 
credit institution in which the HFSF participates, and to set out the necessary tender/bidding 
procedures through which the divestments will take place, the conditions for participating in these 
procedures  and the possible pricing methodology for the dives tment of HFSF -held shares and/or  
instruments .  
1 Council Decision 98/415/EC of 29  June 1998 on the consultation of the European Central Bank by national authorities 
regarding draft legislative provisions (OJ L 189, 3.7.1998, p. 42). 
ECB -PUBLIC  
2 1.1.3 The draft law provides  that the HFSF Board may consult , on matters relating to the HFSF’ s 
divestment strategy , with such institutional bodies as it deems appropriate, including credit 
institutions, ensuring the confidentiality of information. To take the decision to adopt the divestment 
strategy, the HFSF Board must commission an independent financial advisor of i nternationally 
recognised standing and experience in similar matters to prepare a report . The Ministry of Finance 
must provide its prior consent on the divestment strategy before it is implemented,  and, to that end,  
may consult the Bank of Greece.  It must also provide the HFSF, at least on a quarterly basis,  with 
its views and opinion on this strategy and its implementation by the HFSF . The HFSF must on its 
side inform the Ministry in writing within ten working days of any reservations it may have regar ding 
the Ministry’s  views.  
1.1.4 The draft law provides  that to decide on any disposal  of HFSF -held shares and/or instruments  in a 
specific credit institution , the HFSF must  obtain a second report from an independent financial 
advisor of internationally recognised standing and experience in similar transactions ( hereinafter the 
‘disposal advisor’). For the selection of the disposal advisor t he Ministry of Finance must  give its 
opinion to the HFSF on the basis of a list of at least three candidates submitted to it by the HFSF. 
The report must  include among others  a proposal for a specific disposal transaction in accordance 
with the divestment strategy , a description and assessment of the prevailing market conditions , a 
reasoned proposal for the most appropriate structure of the transaction  and a reference timetable for 
the disposal. The disposal of the HFSF’s holding s in each credit institution is to be carried out in a 
manner consistent with the HFSF’s objectives. The draft law stipulates  that the fact that a price at 
which HFSF -held shares and/or instruments will be divested that is expected to be lower than the 
market price or the price at which the HFSF acquired the shares  and/or instruments  is not a sufficient 
condition for the divestment strategy to be postponed or not implemented.  
1.2  Lifetime and governance of the HFSF  
1.2.1  Second, the draft law amends the Law on the HFSF as concerns the lifetime and governance of the 
HFSF. In this respect, t he draft law extends  the lifetime of the HFSF from December 2022 to 
December  2025.  The draft law provides that the Ministry of Finance will decide together with the 
European Financial Stability Facility and the European Stability Mechanism (ESM) on the way in which the capita l, assets and liabilities of the HFSF will be transferred upon the end of its  lifetime or 
liquidation. T o that end, t he draft law also provides that the Ministry  of Finance may directly 
commission a study on the transition process with  an independent provider of financial or business 
and management advice, in accordance with a prior joint decision of the Minister for  Finance and the 
ESM.  
1.2.2  The draft law  also reforms  the governance structure of the HFSF in a number of respects. Most  
notably it replaces  the two-tier governance model , comprising  a General Council and Executive 
Committee,  with a single governance body , the HFSF Board, consisting of 6 non-executive and 3 
executive members . The tasks assigned to the Executive Committee will be exercised by the HFSF 
CEO and the tasks of the General Council will henceforth be exercised by the HFSF Board.  
ECB -PUBLIC  
3 1.3  Special powers  and rights  of the HFSF  
1.3.1  Third, the draft law amends the Law on the HFSF as concerns the HFSF’s special powers  and rights  
and clarifies that , under the Law on the HFSF,  these powers and rights exist in addition to the 
standard shareholders’ rights under general corporate and banking law . In this contex t, the draft law 
also removes  all restrictions on voting rights associated with the shares and/ or other instruments 
held by the HFSF in credit institutions2. 
1.3.2 The draft law removes  the following special rights of the HFSF in credit institutions’ board  of director s: 
the right to ask that the g eneral assembly of shareholders be convened; the right to veto decisions 
of the credit institution’s board of directors regarding dividend dist ributions and variable remuneration 
in case the institution’s non-performing exposure ( NPE) ratio is below 10%; the right to veto decisions 
of the credit institution’s board of directors  that might endanger depositors’ interests or more 
generally the solvency, liquidity or smooth functioning of the credit institution; and the right to approve 
the credit institution’s Chief Financial Officer. In addition, the draft law provides that restrictions on 
the fixed remuneration of members of the board of directors and key executives only apply for as 
long as the NPE ratio of the credit institution in question is above 10% . Bonuses  for the same persons 
are abolished for as long as the EU restructuring plan of the credit institution in question is not 
concluded3 and variable remuneration can only be provided in the form of shares, stock options  or 
other instruments4, for as long as the credit institution is under capital support5.  
1.3.3 The HFSF’s free access to credit institutions books and records is restricted only to information 
needed for the purpose of the divestment of the HFSF’s holding in the credit institution.  
1.3.4 The draft law removes  certain HFSF powers relating to governance aspects  of credit inst itutions , 
including the power to evaluate the corporate governance arrangements of a credit institution that 
the HFSF has funded, which also extends  to the evaluation of individual members of the board of 
director s and the board committees of that institution6, and the power to develop criteria for the 
evaluation of the above elements7. The draft law limits the minimum suitability criteria determined by 
the HFSF for a credit institution’s board of directors.  On the basis of the se amendments, the draft 
law also removes  the HFSF’s power  to make specific recommendations for changes in the corporate 
governance of a credit institution,  including the replacement of members of its board of directors , and 
to escalate to the general assembl y of s hareholders  if needed8.  
1.3.5  The draft law specifies that the criteria for institutions’  boards  of director s established by the HFSF 
are complementary to the criteria for institutions’  boards  of director s under general corporate banking 
law. 
 
2  These restrictions are currently outlined in Article 7A of the Law  on the HFSF . 
3  Restructuring plans are submitted to the European Commission which must  approv e the capital support for the 
respective credit institution.  
4  Within the meaning of Articles 52 or 63 of Regulation (EU) No 575/2013 of the European Parliament and of the Council 
of 26 June 2013 on prudential requirements for credit institutions and amending Regulation (EU) No 648/2012 (OJ L 
176, 27.6.2013, p. 1) , in accordance with Article 86 of Law 4261/2014.  
5  Capital support is currently defined in Article 7 of the Law on the HFSF.  
6  As stipulated in the current paragraph 5 of Article 10 of the Law on the HFSF , which the draft law  propose s to delete.  
7  As stipulated in the current paragraph 6 of Article 10 of the Law on the HFSF , which the draft law  propose s to delete.  
8  As stipulated in the current paragraph 7 of Article 10 of the Law on the HFSF, which the draft law  propose s to amend 
accordingly, and in the current paragraphs 8 and 9 of Article 10 of the Law on the HFSF , which the draft law  propose s 
to del ete.  
ECB -PUBLIC  
4 1.3.6 Lastly, the draft law remove s from the HFSF‘s tasks the facilitation of credit institutions in managing 
non-performing loans . 
 
2. General observations  
2.1 The ECB welcomes the divestment -related amendment s to the Law on the HFSF , which pave the 
way for  further normalisation of the Greek financial sector  following the reduction in vulnerabilities 
and crisis -related legacies in recent years . A stronger commitment to accelerate divestment of HFSF -
held shares and/or  instruments in credit institutions in a coordinated and transparent manner under 
a pre- established,  market -based framework and process laid down in the divestment strategy  will 
benefit the Greek banking sector . A further reduction of vulnerabilities in the Greek banking sector 
by addressing remaining weaknesses in credit institutions’  asset quality, capital and profitability will 
support t he divestment strategy . In this respect, the twin financial stability and divestment objectives 
of the HFSF should be r espected.  
2.2 The ECB welcomes the proposed simplification and streamlining of  the HFSF’s governing bodies, 
as this will enable the HFSF to more effectively pursue its objectives and facilitate more effective 
decision -making. At the same time, it is of the utmost importance that the HFSF continues to enjoy 
its statutory  independence, and that it continues to operate in accordance with private economic 
activity standa rds9.  
2.3 The ECB welcomes the propos ed remov al of certain special rights of the HFSF in  credit institutions’ 
boards  of director s and of certain HFSF powers relating to corporate governance that now fall under 
the mandate of the ECB’s Single Supervisory Mechanism,  which did not exist at the time the HFSF 
was established. These amendments also reflect the fact that most Greek credit institutions falling 
within the scope of the Law on the HFSF have completed the ir EU restructuring plans. The draft law 
is expected to support the transition of Greek credit institutions into ordinary  supervised entities and 
help ensure a level playing field with other European credit institutions.  In this context, the HFSF’s 
special role in Greek  credit institutions  will be rationalised,  bringing the HFSF  closer to an ordinary 
shareholder  in accordance with general corporate and banking law.   
 
This opinion will b e published on EUR -Lex.  
 
 
Done at Frankfurt am Main, 11 May 2022.  
 
[signed]  
 
The President of the ECB  
Christine  LAGARDE  
 
9  See paragraph 1.2.1 of Opinion CON/2010/54 and paragraphs 4.2 and 4.3 of Opinion CON/2013/38.  All ECB Opinions 
are available on EUR -Lex.