EN ECB -PUBLIC 
 
 
OPINION OF THE EUROPEAN CENTRAL BANK  
12 March  2013  
on the recapita lisation of credit institutions  
(CON/2013 /17) 
 
Introduction and legal basis  
On 4 March  2013, the European Central Bank (ECB) received a request from the Greek Ministry of 
Finance for an opin ion on draft legislative provisions amend ing the law on the Hellenic Financial 
Stability Fund . On 6 March 2013, the ECB received a supplementary request on additional draft 
provisions amending the same law  (hereinafter jointly referred to as the ‘draft pro visions ’). 
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/EC of 
29 June 1998 on the consultation of th e European Central Bank by national authorities regarding draft 
legislative provisions1, as the draft law  relates to rules applicable to financial institutions , insofar as they 
materially influence the stability of financial institutions and markets. In ac cordance with the first 
sentence of Article 17.5 of the Rules of Procedure of the E uropean Central Bank, the Governing Council 
has adopted this opinion.  
 
1.  Purpose of the draft provisions  
1.1 Pursuant to the explana tory memorandum for  the draft provisions , their purpose is : (a) to reinstate 
the pre-emption rights  of existing shareholders , thereby facilitating private investor participation in 
a common equity capital increase of the banks under recapitali sation ; (b) to broaden the scope for 
shortening  initial and adjourned general meeting notice periods , to speed up the process of a bank ’s 
recapitali sation ; and ( c) to eliminate counter motives for private investors to participate in the 
recapitali sation of Greek banks. The draft provisions  amend Law No 3864/20102 establishing the 
Hellenic F inancial S tability F und (hereinafter the ‘ Law on HFSF’ ). 
1.2 In particular, the following changes are made:  (a) the third indent  of Article 7(1) of the Law on 
HFSF is amended to restore existing shareholders’  pre-emption r ights, by abrogating the abolition 
of such rights  under the law currently in force;  (b) the  fourth indent  of Article 7(2) of the Law on 
                                                 
1  OJ L 189, 3.7.1998, p. 42.  
2  FEK Α 138/9.8.2010.  
ECB -PUBLIC  
2 HFSF is supplemented to extend the shortened time limits currently in force3 to the convocation of 
general shareholders meeting s deciding on any  issue referring to the implementation of the Law on 
HFSF4; and (c) Article 7(5) of the Law on HFSF is amended to  provide that  HFSF shares will, 
unlike the regime currently in force, be taken into consideration when calculating  the thresholds  
activating the exercise of a mandatory takeover bid under  Article 7( 1) of Law No 3461/20065.   
 
2. General  observations  
The ECB welcomes the draft provisions , to the extent that they  aim to complement the Greek leg al 
framework for the recapitali sation of credit institutions , established in line with the financial sector 
objectives outlined by the Greek authorities in the Memorandum of Economic and Financial Policies , as 
applicable from time to time6. In relation to the development of such a natio nal leg al framework , the ECB 
refer s to its previous relevant opinions7. Without prejudice to this general observation, the ECB ha s the 
following specific observations . 
 
3. Reinstatement of the shareholders’ pre -emption rights  
The ECB attaches the utmost im portance to the completion of the recapitalisation of credit institutions in 
Greece. In this respect , it supports the reinstatement of existing shareholders’ pre -emption rights, as it 
expects that this will enable  the eff icient and eff ective participation of private investors in the  
recapitali sation of  Greek banks . 
 4. Timely completion of corporate proceedings for the recapitalisation  
4.1 The ECB stresses the importance of completi ng the issuance of common stock  in a timely manner , 
thereby  ensur ing the prompt finalisation of the recapitalisation process. Without prejudice to the 
observations below , the ECB notes  the proposed amendment  to Article 7(2) of  the Law on HFSF,  
as a result of which the application of the shortened minimum time limits  for calling the general 
shareholder meetings will be extended to any general meetings decid ing on issues related to the 
implementation of the Law on HFSF related to  the recapitali sation process . 
                                                 
3  Currently the shortened time limits apply only to shareholders meetings deciding on the issuance of convertible bonds or 
other financial instruments and to the submission of documents to the supervisory authorities . 
4  The draft law stip ulates that this amendment to  the fourth indent of Article 7(2) will be deemed to have entered into force 
upon submission of the draft law to the Parliament . 
5  Law 3461/2006 (FEK A 106/30.5.2006) transposes into Greek law Directive 2004/25/EC of the European Parliament and 
of the Council of 21 April 2004 on takeover bids (OJ L 142, 30.4.2004, p. 12).  
6  Annex V to Law No 4046/2012 on the approval of the draft financing agreements between the European Financial 
Stability Fund,  the Hellenic Republic and the Bank of Greece and of the draft Memorandum of Understanding between 
the Hellenic Republic, the European  Commission and the Bank of Greece and other provisions of utmost importance for 
reducing the public debt and saving the national economy  (FEK A 28/14.12 .2012), as amended . 
7  See in particular  Opinions CON/2012/90, CON/2010/54, CON/2011/72, CON/2012/014, CON/2012/25 and 
CON/2012/39.  
ECB -PUBLIC  
3 4.2  In previous opinions8, the ECB underlined that any provision permitti ng the shortening of 
minimum time limits required by law for the convocation of general meeting s of shareholders 
should be considered by the consulting authorities having regard to both the Greek corporate law 
framework and to the relevant Union legislatio n. In this respect , the ECB notes that any restriction 
on shareholders’ rights would require careful consideration in light of the protection of 
shareholders’ rights enshrined in Union legislation , in this case A rticle 5  (Information prior to the 
general m eeting)  of Directi ve 2007/36/EC  on the exercise of certain rights of shareholders in listed 
companies9. 
 
5.  Application of takeover bid  provision s in the recapitali sation process  
5.1 Following recapitali sation by the HFSF, viable Greek banks will, pursuan t to the Law on HFSF, be 
managed by their private shareholders, provided that the latter have achieved a minimum equity 
participation representing 10% of the bank’ s total share capital as a result  of the recapitalisation. 
For as long as such minimum privat e sector participation is maintained, the HFSF can only exercise 
its voting rights in specific cases provided for in the Law on HFSF10. 
5.2 The ECB acknowledges the need to facilitate and encourage private participation in the process of 
recapitali sing Gree k banks . Furthermore, it  understands that the shareholding structure of Greek 
banks m ay warrant the proposed amendment  in Article 7(5) of the Law on HFSF disapplying the 
obligation for a mandatory takeover bid, at least at the stage of the initial common equity capital 
increase. However , the ECB notes  that Article 5(1) of D irective 2004/25/EC requires the 
submission of a mandatory bid in such circumstances and does not currently allow Member States 
to dispense with this obligation on acquirers, be they Stat e or private entities.  Although the 
mandatory bid is designed primarily to protect the  rights of minority shareholder s, which is not the 
primary purpose of the draft provisions,  the ECB considers it  important that the Union regime for 
takeover bids is effe ctively applied to the recapitalis ed banks  in the long term , taking into account , 
inter alia , the need to safeguard the interests of the HFSF both as a shareholder and investor  and 
restore confidence in the smooth operation of the Greek capital market . The ECB would therefore 
invite the consulting authority to consider the proposed amendment  in a more comprehensive 
context  that will ensure an efficient application of the takeover bids provisions that duly takes into  
                                                 
8   Opinion CON/2012/90, paragraph 6.1.  
9   Directive 2007/36/EC of the Ε uropean Parliament and of the Council of 11 July 2007 on the exercise of certain rights of 
shareholders in listed companies ( OJ L 184, 14.7.2007, p. 17). On this point, account should be taken of the ongoing 
legislative initiative at Union level aimed at amending, inter alia , Directive 2007/36/EC to provide for the shortening of 
minimum time limits for the convocation of a general meeting to decide on a capital increase subject to the fulfilment of 
certain conditions. See in particular proposal for a directive of the European Parliament and of the Council establishing a 
framework for the recovery and resolution of credit institutions and investment firms  and amending Council Directives 
77/91/EEC and 82/891/EC, Directives 2001/24/EC, 2002/47/EC, 2004/25/EC, 2005/56/EC, 2007/36/EC and 2011/35/EC 
and Regulation (EU) No 1093/2010 (COM (2012) 280 final).  
10  Namely, on decisions concerning an amendment of the company’s charter, a capital increase or decrease or core 
corporate events, such as the bank’s merger or the selling off of the bank’s assets, including subsidiaries ; see 
Article  7a(1) of Law on HFSF.  
ECB -PUBLIC  
4 account all relevant recapitali sation par ameters, e.g. the exercise of warrants, as well as exit options 
for the HFSF in the context of future reprivatisation .  
 
6.  ECB representation and HFSF governance structure  
In the context and on the occasion of the proposed amendments to the Law on HFSF, the ECB would like 
to invite the consulting authority to also address aspects of the HFSF framework already highlighted in 
previous ECB opinions . In particular, Article 4(15) of the Law on HFSF should clarify that the ECB 
representative in the HFSF governi ng bodies participat es without voting rights11. Furthermore, the 
provision in Article 4(13) of the Law on HFSF entitling the ECB’s representative to request a 
convocation of  a meeting of the General Council should be deleted, given that this goes beyond the  mere 
observer status12. Finally , the HFSF’s two -tier governance structure should be amended in line with the 
ECB’s re commendation that members of the Executive Board should at the same time be members of the 
General Council13.  
 
This opinion will be published on the ECB’s website.  
 
 
Done at Frankfurt am Main, 12 March  2013.  
 
[signed]  
 
The President of the ECB  
Mario DRAGHI  
                                                 
11  A draft law amending the Law on HFSF, on which the ECB was consulted and issued its O pinion CON/2012/90, 
explicitly mentioned that the ECB representative in the HFSF participates without a voting right. However, the final text 
of the law following its adoption did not contain this explicit statement.  
12  Opinion CON/2012/90, paragraph 8.  
13  Opinion CON/2012/14, paragraph 3.1 .