Opinion of the European Central Bank of 21 April 2009 at the request of the Greek Ministry of Economy and Finance on a draft amendment to the Law on enhancing liquidity of the economy to address the impact of the international financial crisis (CON/2009/39)
Date: 2009-04-21
Institutions: European Central Bank
Subjects: Greece, bond, capital increase, financial stability, money-market liquidity, national law

EN 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 21 April 2009 

at the request of the Greek Ministry of Economy and Finance on a draft amendment to the Law on 

enhancing liquidity of the economy to address the impact of the international financial crisis 

(CON/2009/39) 

Introduction and legal basis 

On  10  April  2009  the  European  Central  Bank  (ECB)  received  a  request  from  the  Greek  Ministry  of 

Economy  and  Finance  for  an  opinion  on  a  draft  amendment  to  the  Law  on  enhancing  liquidity  of  the 

economy to address the impact of the international financial crisis (hereinafter the ‘draft amendment’). 

The  ECB’s  competence  to  deliver  an  opinion  is  based  on  Article  105(4)  of  the  Treaty  establishing  the 

European  Community  and  the  sixth  indent  of  Article 2(1)  of  Council  Decision  98/415/EC  of 

29 June 1998  on  the  consultation  of  the  European  Central  Bank  by  national  authorities  regarding  draft 
legislative provisions1, as the draft amendment relates to rules applicable to financial institutions insofar 

as they materially influence the stability of financial institutions and markets. In accordance with the first 

sentence of Article 17.5 of the Rules of Procedure of the European Central Bank, the Governing Council 

has adopted this opinion. 

1.  

Purpose of the draft amendment 

The draft amendment clarifies and supplements Article 1 of Law 3723/2008 on enhancing liquidity 
of the economy to address the impact of the international financial crisis2 (hereinafter the ‘Law’). 

In particular, the draft amendment specifies that, for the purposes of increasing the share capital of 

a corporate bank (société anonyme) pursuant to Article 1 of the Law in conjunction with Decision 
542a/B2884/26-11-2008  of  the  Minister  for  Economy  and  Finance  implementing  the  Law3 

(hereinafter  the  ‘Decision’),  the  valuation  of  the  bonds  contributed  by  the  Greek  State  for  the 

purpose of taking up the shares issued in the context of the share capital increase must take place 

before the State takes up the shares. The valuation is to be carried out by a committee composed of 

two  independent  certified  auditors,  which  will  be  appointed  by  a  decision  of  the  Minister  for 

Economy and Finance. The valuation will be based on the features of the bonds contributed, which 

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3 

OJ L 189, 3.7.1998, p. 42.  
FEK 250 A/9.12.2008. 
FEK 2471V/4.12.2008. 

 
 
 
 
                                                 
will  be  defined  by  the  competent  department  of  the  Ministry  of  Economy  and  Finance. 

Furthermore, in case of a repurchase of preference shares with Greek Government bonds, the same 

committee will carry out the valuation of the bonds. 

As provided for in the draft amendment, a decision of the Minister for Economy and Finance will 

define  the  time  for  the  submission  of  the  committee’s  report  to  the  Ministry  of  Economy  and 

Finance  and  to  the  relevant  credit  institution,  as  well  as  the  remuneration  of  the  members  of  the 

committee. 

Furthermore,  the  draft  amendment  introduces  a  derogation  from  the  provisions  of  Article  9  of 

Codified  Law  2190/1920  governing  the  valuation  of  contributions  to  corporations  (sociétés 

anonymes), inter alia in the event of an increase in their share capital. 

In  addition,  the  draft  amendment  provides  that  the  abovementioned  valuation  report  will  not  be 

subject  to  the  publicity  requirements  provided  for  in  Article  7b  of  Codified  Law  2190/1920,  and 

also stipulates that in case of a capital increase for the redemption of preference shares, the relevant 

decision  will  be  taken  pursuant  to  Article  29  (1)  and  (2)  and  Article  31(1)  of  Codified  Law 

2190/1920. 

Moreover,  the  draft  amendment  provides  that  it  prevails  over  any  decisions  of  the  general 

assemblies of the relevant credit institutions in the event of conflict, and that its provisions apply 

from 1 January 2009. According to the explanatory memorandum to the draft amendment, as the 

new provisions clarify and supplement Article 1 of the Law governing share capital increases, it is 

appropriate that they enter into force prior to the submission of requests for share capital increase 

by the credit institutions concerned and the grant of the relevant approvals. 

2. 

General observations 

In its Opinion CON/2008/79 of 27 November 2008, the ECB has already commented on the Law 

and on the Decision, both of which are referred to in the draft amendment. To the extent relevant, 

the  observations  made  in  Opinion  CON/2008/79  also  apply  to  the  changes  proposed  by  the  draft 

amendment.  

In  particular,  the  ECB  notes  that  the  recapitalisation  measures  considered  in  Member  States  are 

aimed at strengthening the capital position of fundamentally sound financial institutions in order to 

improve the functioning and stability of the banking system and to ensure the proper financing of 

the  economy.  The  ECB  notes  that  the  above  principles  should  be  taken  into  consideration  in  the 

valuation  of  the  bonds  contributed  by  the  Greek  State  for  the  purposes  of  increasing  the  share 

capital  of  corporate  banks  to  ensure  a  consistent  approach  to  defining  the  conditions  for 

recapitalisation. 

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Against  this  background,  the  ECB  reiterates  that  in  line  with  the  ‘Declaration  on  a  concerted 
European action plan of the euro area countries’4, the conditions for capital support should aim at 

protecting the interests of taxpayers and respecting the level playing-field among institutions in the 

euro area. In addition, the ECB highlights that the pricing conditions for capital support should be 

risk-based  and  market-oriented,  determined  by  taking  into  consideration  the  specific  risk  of  both 

the specific instrument chosen for injecting capital and the institution concerned. Specific features 

of the instruments for capital injections should be appropriately chosen so that, while encouraging 

an early end to the State’s capital support of banks, they should not result in an excessive increase 

in the cost of capital. 

Finally, the ECB understands that the draft amendment aims to ensure the proper implementation 

of Article 1 of the Law by adjusting the rules applying to the valuation of Government bonds to be 

carried out for the purposes of increasing the share capital of corporate banks to reflect the specific 

and temporary nature of this recapitalisation measure.  

3.  

Specific observations 

The ECB has no specific observations on the draft amendment.  

This opinion will be published on the ECB’s website.  

Done at Frankfurt am Main, 21 April 2009. 

[signed] 

The President of the ECB 

Jean-Claude TRICHET 

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The Declaration is available on the website of the former French Presidency at www.ue2008.fr. 

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