Opinion of the European Central Bank of 16 April 2012 on the Statute of the Bank of Greece (CON/2012/31)
Date: 2012-04-16
Institutions: European Central Bank
Subjects: Greece, bond, central bank, financial stability, financing method, institutional activity, national law, profit

EN 

ECB-PUBLIC 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 16 April 2012 

on the Statute of the Bank of Greece 

(CON/2012/31) 

Introduction and legal basis 

On 5 April 2012 the European Central Bank (ECB) received a request from the Bank of Greece for an 

opinion  on  draft  legislative  provisions  introducing  amendments  to  the  Statute  of  the  Bank  of  Greece 

(hereinafter the ‘draft provisions’). 

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 on the third and sixth indents 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  provisions  relate  to  the  Bank  of  Greece  and  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 provisions 

The  draft  provisions  introduce  a  number  of  amendments  to  the  Statute  of  the  Bank  of  Greece, 

related to its operation, tasks and governance, participation in its share capital and the distribution 

of its profits. 

1.1  As  regards  the  operation,  tasks  and  distribution  of  profits  of  the  Bank  of  Greece,  the  proposed 

amendments: (a) extend the duration of the Bank of Greece from 2020 to 2050; (b) enable the Bank 

of  Greece’s  General  Council  to  convene  and  take  action  with  special  composition  in  relation  to 

urgent  matters;  (c)  expressly  entrust  the  Bank  of  Greece  with  macro-prudential  authority;  (d) 

specify  for  the  financial  years  2012-2020  the  way  in  which  the  income  of  the  Bank  of  Greece 

stemming from Greek government bonds forming part of its investment portfolio on 31 December 

2011 will be transferred to the Greek State. 

1 

OJ L 189, 3.7.1998, p. 42. 

 
 
 
 
                                                 
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1.2  As  regards  governance  and  participation  in  share  capital,  the  proposed  amendments:  (a)  prohibit 
persons2  supervised  by  the  Bank  of  Greece  from  holding  Bank  of  Greece  shares  and  introduce  a  

2% cap on the voting rights that may be exercised by any private shareholder, with the exception of 

entities governed by public law, social security organisations and organisations providing services 

in the public interest and (b) provide that the Executive Committee, consisting of the Governor and 

the two Deputy Governors, will take decisions based on a quorum and majority of two members, 

one  of  which  must  be  the  Governor.  The  Executive  Committee  will  be  responsible  for  the 

prudential supervision of entities supervised by the Bank of Greece, and will exercise  all powers 

related to this task by issuing acts or empowering other competent bodies of the Bank of Greece to 

exercise such powers. The Executive Committee’s work will be monitored by three non-executive 

General Council members. 

2. 

General observations 

In general, the ECB welcomes the proposed amendments to the Statute of the Bank of Greece as 

they enhance the operation of the Bank of Greece and the exercise of its tasks. 

Moreover, the ECB understands that the proposed amendments are aimed at bringing the Statute of 

the Bank of Greece in line with some of the objectives set out in the Memorandum of Economic 
and  Financial  Policies  (hereinafter  the  ‘Memorandum’)3,  in  accordance  with  the  time  frame 

provided for therein. In the light of the Bank of Greece’s responsibility for resolution, restructuring 

and supervision, the draft provisions provide for collegial decision-making at the executive level, 

i.e.  the  Governor  and  Deputy  Governors,  and  establish  on-going  accountability  through  internal 

oversight  by  nonexecutives  in  the  General  Council.  The  draft  provisions  revise  the  structure  and 

rights of the Bank of Greece’s shareholders to eliminate possible conflicts of interest in the Bank of 

Greece’s  public  policy  role.  In  this  respect,  the  draft  provisions  prohibit  supervised  institutions 

from shareholdings and set a cap on the number of votes that each or related private shareholders 

can exercise. 

3. 

Specific observations 

3.1  Distribution of profits 

3.1.1  The transfer of the income of the Bank of Greece from Greek government bonds forming part of its 

investment  portfolio  on  31  December  2011  provided  for  in  Article  71(3)  of  the  draft  provisions 

must comply with the monetary financing prohibition laid down in Article 123 of the Treaty, which 

prohibits overdraft facilities or any other type of credit facility with an NCB in favour of the public 

sector. Article 123 of the Treaty prohibits, in particular, the distribution of central bank profits that 

have not been fully realised, accounted for and audited and the distribution of income outside the 

statutory profit distribution rules. In order to comply with the monetary financing prohibition, the 

2  
3  

This term includes both physical persons and legal entities. 
The 
117; 
http://ec.europa.eu/economy_finance/publications/occasional_paper/2012/pdf/ocp94_en.pdf; also as an Annex V to Law 
4046/2012. FEK A 28/14.2.2012. 

Greece,  March 

Programme 

Adjustment 

Economic 

Second 

2012, 

for 

p. 

2 

                                                 
ECB-PUBLIC 

Bank  of  Greece’s  income  from  Greek  government  bonds  may  only  be  transferred  to  the  State  as 

part  of  the  normal  profit  distribution  and  subject  to  the  condition  that  the  net  profit  of  the  year 

exceeds that income. The draft Article 71(3) may create the impression that the income stemming 

from  Greek government bonds should be distributed separately and therefore should be amended 

accordingly.  

3.1.2  In  addition,  the  distribution  of  profits  must  also  comply  with  the  principle  of  financial 

independence.  The  transfer  of  the  income  of  the  Bank  of  Greece  from  Greek  government  bonds 

forming part of its investment portfolio on 31 December 2011 before the allocation of funds to the 

regular  reserve  fund  could  affect  the  Bank  of  Greece’s  financial  independence  in  periods  during 

which the regular reserve fund is below its maximum statutory level. 

Article 71(3) should therefore clarify that in years where the size of the regular reserve fund is at its 

statutory limit, such income is to be distributed to the State budget as part of and up to the limit of 

the net profits of the Bank of Greece. In years where the size of the regular reserve fund is below 

its statutory limit, such income should be distributed to the State budget up to the remaining surplus 

after the regular reserve fund has been funded according to Article 71(1). 

3.2 

Shareholder rights 

The  ECB  welcomes  the  proposed  amendments  that  prohibit  persons  supervised  by  the  Bank  of 

Greece from participating in its share capital and that cap the voting rights that may be exercised by 

any private shareholder at general meetings of the Bank of Greece to votes attached to shares that 

do not exceed the percentage that corresponds to 2% of the Bank of Greece’s share capital. These 

amendments  aim  at  preventing  possible  interference  in  the  exercise  by  the  Bank  of  Greece  of  its 

public tasks. 

3.3  Governance arrangements 

The ECB notes that the proposed amendments enhance the Executive Committee’s role, making it 

a  regular  body  of  the  Bank  of  Greece  entrusted  with  the  prudential  supervision  of  entities 

supervised by the Bank of Greece. Although not explicitly mentioned in the proposed provisions, 

the  ECB  understands  that  the  tasks  related  to  the  exercise  of  prudential  supervision  by  the 

Executive  Committee  include,  inter  alia,  the  exercise  of  the  resolution  powers  of  the  Bank  of 

Greece.  The  ECB  considers  that  the  Executive  Committee’s  proposed  composition  and  decision-

making process allow for the establishment of a collegial decision-making process in the Bank of 

Greece in areas critical for the stability of financial institutions and markets, such as the resolution 

of supervised entities. The ECB notes that the work of the Executive Committee will be monitored 

by three non-executive members of the Governing Council; the ECB understands that the oversight 

conducted by the Governing Council will in no way impede the Executive Committee’s decision 

making powers.  

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ECB-PUBLIC 

3.4   Exercise of the macro-prudential authority  

The  draft  provisions  provide  that  the  Bank  of  Greece  exercises,  inter  alia,  the  macro-prudential 

authority in the context of prudential supervision. The ECB understands that these amendments are 
aimed  at  reflecting  Recommendation  ESRB/2011/34,  which  provides  that  Member  States  should 

designate a national authority entrusted with the conduct of macro-prudential policy. 

3.5   Miscellaneous  

It  would  be  advantageous  to  reflect  the  changes  to  the  organisational  structure  of  the  Bank  of 

Greece,  with  regard  to  the  separation  of  prudential  supervision  from  resolution,  in  the  draft 

provisions.  

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

Done at Frankfurt am Main, 16 April 2012. 

[signed] 

The President of the ECB 

Mario DRAGHI 

4  

Recommendation  ESRB/2011/3  of  the  European  Systemic  Risk  Board  of  22  December  2011  on  the  macro-prudential 
mandate of national authorities (OJ C 41, 14.2.2012, p. 1). 

4