Opinion of the European Central Bank of 22 May 2012 on the recapitalisation and resolution framework for credit institutions in Greece (CON/2012/39)
Date: 2012-05-22
Institutions: European Central Bank
Subjects: Greece, bond, capital increase, credit institution, financial stability, national law, share

EN 

ECB-PUBLIC 

OPINION OF THE EUROPEAN CENTRAL BANK 

22 May 2012 

on the recapitalisation and resolution framework for credit institutions in Greece 

(CON/2012/39) 

Introduction and legal basis 

On  11  April  2012,  the  European  Central  Bank  (ECB)  received  a  request  from  the  Greek  Ministry  of 

Finance  for  an  opinion  on  a  set  of  draft  provisions  on  urgent  issues  for  the  recapitalisation  of  credit 

institutions  in  Greece,  and  on  19  April  2012  the  ECB  received  a  revised  version  of  part  of  such  draft 

provisions  (hereinafter  the  ‘original  draft  provisions’).  On  30  April  2012,  the  ECB  received  a 

supplementary  consultation  request  from  the  Greek  Ministry  of  Finance  on  provisions  governing  the 

bridge recapitalisation of credit institutions in Greece (hereinafter the ‘supplementary draft provisions’). 
The original draft provisions1 and the supplementary draft provisions were enacted under the emergency 

legislative  procedure  provided  for  in  Article  44  of  the  Greek  Constitution  and  entered  into  force  on 
19 April 20122 and 30 April 20123, respectively. 

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  third  and  sixth  indents  of  Article  2(1)  of  Council  Decision 

98/415/EC  of  29  June  1998  on  the  consultation  of  the  ECB  by  national  authorities  regarding  draft 

legislative  provisions,  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 

1.1   The  draft  provisions  amend  the  Greek  legal  framework  for  the  recapitalisation  and  resolution  of 
credit institutions4. In particular, Article 1 of the original draft provisions amends Law 3864/20105 

on the Hellenic Financial Stability Fund (hereinafter the ‘Law on the HFSF’) and Article 2 of the 

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4  

5  

With the exception of the provisions of Article 3, as discussed in paragraphs 1.1, 1.4 and section 6.   
FEK A 94/19.4.2012. 
FEK A 103/30.4.2012. 
For  previous  ECB  Opinions  on  amendments  to  the  legal  framework  on  recapitalisation  and  resolution  of  credit 
institutions in Greece see in particular CON/2011/72, CON/2012/14 and CON/2012/25. All ECB opinions are published 
on the ECB’s website at www.ecb.europa.eu. 
FEK A 119/21.7.2010. 

 
 
 
 
                                                 
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original  draft  provisions  amends  Law  3601/20076  (hereinafter  the  ‘Law  on  banking’)  and  Law 
3556/20077.  In  addition,  Article  3,  submitted  as  a  distinct  set  of  the  original  draft  provisions, 

introduces  taxation  and  accounting  arrangements  pertaining  to  the  participation  of  credit 

institutions  in  the  Greek  debt  restructuring.  The  supplementary  draft  provisions  further  amend 

Article 6 of the Law on the HFSF.  

1.2  Amendments to the Law on the HFSF  

According to the explanatory memorandum, Article 1 of the original draft provisions introduces the 

amendments necessary to: (i) increase the capital of the Hellenic Financial Stability Fund (HFSF) 

to  €  50  billion  in  the  context  of  the  second  economic  adjustment  programme  for  Greece;  (ii) 

include in the HFSF’s assets, in addition to cash, capital in the form of European Financial Stability 

Facility (EFSF) notes or other financial instruments issued or approved by the EFSF, which are to 

be held with an account in the Bank of Greece’s system for monitoring transactions in book-entry 

securities,  with  the  Bank  of  Greece  acting  as  a  custodian;  (iii)  extend  the  period  within  which  a 

credit  institution’s  viability  under  the  business  plan  should  be  ensured,  no  longer  taking  into 

account profitability; (iv) enable the HFSF, following a decision by the Bank of Greece, to provide 

to credit institutions eligible for recapitalisation a certification committing the HFSF to participate 
in  the  credit  institution’s  capital  increase  once  certain  conditions  are  met8  and,  in  such  cases,  to 

enable  the  HFSF,  until  completion  of  the  capital  increase,  to  have  direct  access  to  the  credit 

institution’s economic data, to conduct due diligence controls and to appoint representatives on its 

Board of Directors with specific powers; (v) to include in the recapitalisation tools, in addition to 

the  existing  common  shares  and  contingent  convertible  bonds,  other  convertible  financial 

instruments;  (vi)  to  facilitate  recapitalisation  by  repealing  the  restriction  on non-transferability  of 

the HFSF’s shares to third parties and on their trading on regulated markets; (vii) to ensure, in view 

of the HFSF’s participation in the share capital of credit institutions, that its financial statements are 

published after those of the latter institutions; and (viii) enable the HFSF to provide guarantees to 

the credit institutions being recapitalised in order to enhance confidence in the domestic financial 

system.  

The  supplementary  draft  provisions  introduce  the  amendments  necessary  to  enable  the  HFSF  to 

provide  bridge  recapitalisation  to  credit  institutions  and  to  authorise  the  Minister  for  Finance, 

following  an  opinion  by  the  HFSF,  to  issue  decisions  further  specifying  corporate  governance 

issues for the period before the completion of the bridge recapitalisation undertaken. 

1.3  Amendments to the Law on banking and to Law 3556/2007 

According to the explanatory memorandum, Article 2 of the original draft provisions introduces the 

amendments necessary to: (i) facilitate the immediate implementation of transfer orders issued as a 

resolution  measure  by  the  Bank  of  Greece  under  Article  63D(2)  of  the  Law  on  banking,  by 

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FEΚ A 178/1.8.2007. 
FEK A 91/30.4.2007 
See Article 1(2)(b) of the original draft provisions. 

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providing that where the transfer order amounts to a concentration of undertakings the procedure 

will not be suspended but will be conducted as normal, unless the Greek Competition Commission, 

which has to be notified, decides otherwise; to avoid uncertainty and ensure the efficiency of the 

procedure,  the  deadline  for  such  decision  is  shortened;  (ii)  authorise  the  Minister  for  Finance  to 

extend the time within which issuers of securities listed in regulated markets are obliged to publish 

the relevant annual financial statements in accordance with law. 

1.4  Draft provisions on taxation and accounting issues 

According to the explanatory memorandum, Article 3 of the original draft provisions, referred to in 

paragraph 1.1 above, mainly aims to address the problem of adequate regulatory capital of credit 

institutions participating in the Greek debt exchange, taking into account the envisaged Union legal 

framework on capital adequacy of credit institutions and investment firms which will incorporate 

the  Basel  III  rules.  In  particular,  according  to  the  explanatory  memorandum,  the  tax  benefit  that 

will arise for the credit institutions participating in the Greek debt restructuring from writing down 

the debit difference resulting from such participation, as defined in Article 3, will not depend on 

their  future  profitability  and,  thus,  will  not  be  deducted  from  their  basic  regulatory  capital. 

Therefore, the need for additional capital outflow from shareholders and eventually from the State 

to credit institutions would be considerably curtailed resulting in no additional charge to the public 

debt. 

2. 

General observations 

As stated in the introduction, the ECB received the original draft provisions on 11 and 19 April and 

it  received  the  supplementary  draft  provisions  on  30  April.  The  original  and  the  supplementary 

draft provisions were enacted under the emergency legislative procedure provided for in Article 44 
of  the  Greek  Constitution9,  and  they  came  into  force  on  19  April  2012  and  30  April  2012, 

respectively. The ECB underlines that it should be consulted in due time prior to entry into force. 

More  generally,  internal  administrative  procedures  should  be  in  place  to  ensure  the  timely 

consultation of the ECB, and the ECB should be consulted at an appropriate point in time in the 

event of amendments during the legislative procedure.  

3. 

Procedure for the activation of the HFSF and bridge recapitalisation 

3.1  Article 1(2)(a) of the original draft provisions amends Article 6(2)(a) of the Law on the HFSF to 

the  effect  that  the  required  business  plan  accompanying  a  credit  institution’s  request  for  capital 

support must demonstrate how the said institution is to ensure viability ‘within three to five years’. 

The ECB understands that this prolongation from three years to a maximum of five years aims to 

9  

This  provides  for  the  issuance  of  a  specific  act by  the  President  of  the  Hellenic  Republic,  acting  on  a  proposal  by  the 
Cabinet. Within 40 days from issuance the act is submitted to Parliament for ratification within another three months. It 
enters into force upon publication in the national Government Gazette. 

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facilitate a longer term strategy of the business plan, which is welcome. The ECB also understands 

that  this  prolongation  does  not  interfere  with  the  maximum  duration  of  four years  of  the  HFSF’s 
investment in a credit institution where it has full voting rights10.  

3.2  According  to  the  new  Article  6(8)  of  the  Law  on  the  HFSF,  introduced  by  Article  1(2)(b)  of  the 

original  draft  provisions,  upon  a  decision  by  the  Bank  of  Greece  the  HFSF  will  provide  a  credit 

institution, which the Bank of Greece has assessed as viable and which has submitted a request for 

capital support under Article 6(2) of such Law, with a certification committing it to participate in 

the  said  institution’s  share  capital  increase  pursuant  to  Article  7  of  the  Law  for  the  amount 

determined  by  the  Bank  of  Greece,  without  following  the  procedure  laid  down  in  Article  6(3) 
thereof11.  The  above  commitment  will  not  apply  where  the  license  of  the  credit  institution  is 

withdrawn for any reason or a procedure for such withdrawal is launched before the procedure for 

the capital increase has commenced.  

3.3  Furthermore,  according  to  the  new  Article  6(9)  of  the  Law  on  the  HFSF,  introduced  by  Article 

1(2)(b) of the original draft provisions, where the HFSF provides the abovementioned certification,  

for the period until the completion of the relevant capital increase the HFSF: (a) will appoint up to 

two  representatives  to  the  Board  of  Directors  of  the  credit  institution,  who  will  have  the  powers 
referred to in Article 10(3) of the Law on the HFSF12 and will recommend to the Board of Directors 

the measures necessary for safeguarding the HFSF’s interests and supervise their implementation; 

and (b) may request from the credit institution any data and information it considers necessary for 

fulfilling  its  purpose  and  may  carry  out  special  audits  (due  diligence)  and  exercise  its  rights 

according to Article 11 of the Law on the HFSF. Article 6(9) of the Law on the HFSF is further 

supplemented by the supplementary draft provisions specifying that the HFSF will have the same 

rights if it has paid in advance the contribution referred to in paragraph 3.4 below in the context of 

the bridge recapitalisation.  

3.4  Finally,  according  to  the  new  Article  6(10)  of  the  Law  on  the  HFSF,  introduced  by  the 

supplementary  draft  provisions,  the  HFSF,  in  view  of  its  participation  in  a  future  share  capital 

increase  of  a  credit  institution  that  the  Bank  of  Greece  has  considered  to  be  viable,  will  pay  in 

advance  its  entire  contribution  to  the  capital  increase  or  part  of  such  contribution  and  up  to  the 

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12  

See Article 8, in conjunction with Article 7a, of the Law on the HFSF. 
According to Article 1(2)(b) of the draft provisions, the HFSF shall grant this certification provided that (a) the business 
plan of the credit institution has been assessed as viable and credible by the Bank of Greece, (b) the above request, also 
notified  to  the  European  Commission,  has  been  approved  by  the  Bank  of  Greece  and  that  (c)  the  Bank  of  Greece  has 
considered  that  granting  such  certification  is  necessary  both  for  the  credit  institution  to  continue  operating  without 
impediments (going concern) and to meet the capital adequacy requirements in accordance with the decisions of the Bank 
of Greece, and for maintaining the financial stability of the Greek banking system. 
Namely:  (a)  to  call  the  general  meeting  of  shareholders;  (b)  to  veto  any  decision  of  the  Board  of  Directors  either  on 
distribution of dividends and bonus policy for the Chairman, Managing Director and the other members of the Board, as 
well as for the general managers and their deputies, or where the decision in question could seriously compromise the 
interests of depositors, or impair the credit institution’s liquidity or solvency or its overall sound and smooth operation; 
(c)  to  request  an  adjournment  of  any  meeting  of  the  credit  institution’s  Board  for  three  (3)  business  days,  until 
instructions are given by the HFSF’s Executive Council, following consultation with the Bank of Greece. Such right may 
be  exercised  by  the  end  of  the  meeting  of  the  credit  institution’s  Board;  (d)  the  right  to  request  that  the  Board  be 
convened; (e) the right to approve the Economic Director. In exercising his rights, the HFSF’s representative in the Board 
of Directors shall respect the credit institution’s business autonomy. 

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amount determined by the Bank of Greece, following a decision of the latter, provided that: (i) the 

credit institution has submitted a request for capital support, accompanied by a business plan and a 

detailed  time  plan;  (ii)  the  request  has  been  approved  by  the  Bank  of  Greece  and  notified  to  the 

European Commission and the business plan has been assessed by the Bank of Greece as viable and 

reliable; (iii) the Bank of Greece considers that the prepayment of the contribution is necessary in 

order  for  the  credit  institution  to  comply  with  the  relevant  capital  adequacy  requirements  and  to 

maintain access to Eurosystem monetary policy operations, and in order to ensure the stability of 

the  Greek  banking  system;  and  (iv)  the  credit  institution  has  concluded  a  subscription  agreement 

with the HFSF and the EFSF. The prepaid contribution will be deposited in an account of the credit 

institution held with the Bank of Greece exclusively for the purpose of the HFSF’s participation in 

the capital increase and will be released upon certification of payment of the capital in accordance 
with Greek company law provisions13. Pending its release for the completion of the capital increase, 

the contribution may be used exclusively for the purpose of ensuring liquidity through repurchase 

transactions with market counterparties and/or through the ECB or the Bank of Greece within the 

Eurosystem. If the HFSF’s contribution to the capital increase is lower than the amount prepaid, or 

if the capital increase does not take place, the HFSF will have a claim for a refund of the excess 

amount or the entire amount, as the case may be, at an interest rate determined by the Minister of 

Finance following a proposal of the Bank of Greece and the HFSF. If the credit institution’s license 

is withdrawn before the completion of the capital increase and a transitional credit institution (TCI) 

is established under Article 63E of the Law on banking, the EFSF notes which have been provided 

as  the  HFSF’s  prepaid  contribution  will  constitute  assets  of  the  TCI.  The  abovementioned 

procedure set out in the new Article 6(10) of the Law on the HFSF will apply following a decision 

of  the  Bank  of  Greece  published  in  the  Government  Gazette,  prior  to  which  the  consent  of  the 
European Commission, the ECB and the EFSF must be obtained 14. 

3.5 

In  relation  to  the  new  Article  6(9)  of  the  Law  on  the  HFSF,  as  introduced  by  the  original  draft 

provisions  and  further  amended  by  the  supplementary  draft  provisions,  the  ECB  notes  that,  as 
already highlighted in previous opinions15, the HFSF’s responsibilities need to be clearly defined, to 

ensure  that  the  HFSF  does  not  inadvertently  interfere  with  the  powers  of  the  Bank  of  Greece  as 

supervisory and resolution authority and as guarantor of the stability of the financial system. The 

documentation for the second economic adjustment programme for Greece explicitly calls for the 
need to ‘clarify the procedures and responsibilities for the valuation of assets and liabilities’16 and 

13  

14  

15  
16  

Under Article 11(2) of Codified Law 2190/1920, in each case of capital increase the payment or not of the capital must be 
certified by the Board of Directors within one month from expiry of the deadline for paying the amount of the increase. 
Certification of payment is not required if the capital increase does not take place through new contributions. 
Furthermore,  according  to  such  Article  6(10)  a  Cabinet  decision  to  be  issued  following  an  opinion  by  the  HFSF  will 
determine:  (i)  the  more  detailed terms of  the  subscription  agreement,  (ii)  the more  detailed  terms  ensuring  the  EFSF’s 
rights, as set out in the Loan Facility Agreement dated 15 March 2012, the draft of which was approved by Article 1 of 
Law 4046/2012 (FEK A 28/14/2/2012), and (iii) any necessary issue for the implementation of such Article 6(10) of the 
Law on the HFSF. 
See Opinion CON/2012/14, paragraph 2.2. 
See section 18 of the Memorandum of Economic and Financial Policies (MEFP) in ‘The Second Economic Adjustment 
Programme for Greece’, March 2012 

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entrusts  the  assessment  of  credit  institutions’  viability  and  capital  raising  plans  to  the  Bank  of 
Greece17, as also reflected in the new Article 6(8) of the Law on the HFSF. The ECB notes that this 

clear allocation of responsibilities could be jeopardised if the HFSF was to be enabled to conduct 

special  audits  (due  diligence)  prior  to  recapitalising  a  credit  institution.  In  particular,  the 

involvement of the HFSF in conducting such audits without any clarification as to the consequences 

of such audits for the recapitalisation procedure could result in interference with the competence of 

the Bank of Greece. The resulting uncertainty and potential delays in the recapitalisation procedure 

would undermine the whole purpose of the new Article 6(8) of the Law on the HFSF, which is to 

enable the Bank of Greece to promptly respond to the recapitalisation needs of a credit institution it 

has assessed as being viable, by immediately providing a solution to ensure such credit institution’s 
(bridge) capital adequacy18. 

3.6 

In relation to the new Article 6(10) of the Law on the HFSF, introduced by the supplementary draft 

provisions  governing  the  bridge  recapitalisation,  the  ECB  highlights  that  for  financial  stability 

reasons  it  is  very  important  to  ensure  that  the  advance  deposit  by  the  HFSF  of  EFSF  notes  will 

result  in  an  increase  in  the  capital  of  the  beneficiary  credit  institution.  In  this  respect,  the  ECB 

considers that the basic purpose of the bridge recapitalisation is to ensure an increase in the loss-

absorbing capital of a beneficiary credit institution. Indeed, the extent to which the recapitalisation 

scheme can achieve this central objective is closely linked to the treatment of the EFSF notes in the 

event  of  the  beneficiary  credit  institution’s  insolvency  prior  to  the  conclusion  of  the  bridge 

recapitalisation. In determining whether this objective has been achieved the views of the Bank of 

Greece,  as  supervisor  of  Greek-licensed  credit  institutions,  will  be  of  central  importance.  In  the 

light of the above considerations, the ECB expects that the bridge recapitalisation will be finalised 

shortly. 

3.7  As to the scope of the restrictions on the beneficiary credit institutions to only use the EFSF notes 

in  repurchase  operations  and/or  as  eligible  collateral  for  borrowing  from  the  Eurosystem  for  the 

period prior to the conclusion of the recapitalisation procedure, the ECB notes that it will be for the 

Eurosystem to define the eligibility criteria for assets to be used in Eurosystem operations.   

3.8  Finally, in relation to the requirement introduced by the new Article 6(10) of the Law on the HFSF 

that the recapitalisation procedure set out therein is to be based on a decision of the Bank of Greece 

after having obtained the consent of the European Commission, the ECB and the EFSF, the ECB 

notes that it is not for a national legislator to confer upon the ECB decision-making powers such as 

that  provided  for  in  Article  6(10)  above.  Besides,  the  involvement  of  the  ECB  in  the  process 

leading  up  to  the  recapitalisation  of  Greek  banks  would  not  be  in  line  with  the  need  to  ensure  a 

clear  role  of  the  Bank  of  Greece  as  the  domestic  supervisory  and  resolution  authority  and  as 

(http://ec.europa.eu/economy_finance/publications/occasional_paper/2012/pdf/ocp94_en.pdf);  also  as  Annex  V  to  Law 
4046/2012 (FEK A 28/14.2.2012). 
See section 17 of the MEFP. 
The above considerations also apply in relation to the bridge recapitalisation procedure provided for in the new Article 
6(10) of the Law on the HFSF, introduced by the supplementary draft provisions. 

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guarantor  of  the  stability  of  the  financial  system,  as  suggested  in  paragraph  3.5  above.  The  ECB 

therefore does not consider itself bound by this provision. Pursuant to Article 127(6) of the Treaty, 

the  Council  of  the  European  Union,  acting  by  means  of  regulations,  may  unanimously  confer 

specific  tasks  upon  the  ECB  concerning  policies  relating  to  the  prudential  supervision  of  credit 

institutions.  In  addition,  Article  127(5)  of  the  Treaty  provides  that  the  ESCB  contributes  to  the 

smooth conduct of policies pursued by competent authorities relating to the prudential supervision 

of credit institutions; however, the consent required by Article 6(10) above goes beyond the scope 

of the ESCB’s competence under Article 127(5). 

4.  Means of provision of capital support 

Article 1(3) of the original draft provisions amends Article 7(1) of the Law on the HFSF to the effect that 

capital  support  to  be  provided  under  such  Law  by  the  HFSF’s  participation  in  the  capital  increase  of  a 

credit  institution  will  be  effected  through  the  issuance  of  common  shares  or  contingent  convertible 

securities or other convertible financial instruments. The ECB welcomes that the original draft provisions 

extend the types of instruments that can be used as recapitalisation tools.    

5. 

Provision of guarantee by the HFSF 

5.1  Article 1(6) of the original draft provisions amends the last sentence of Article 16C(6) of the Law 

on  the  HFSF  to  enable  the  HFSF  to  provide  guarantees  to  the  credit  institutions  eligible  for 

recapitalisation  under  Article  2(1)  of  the  said  Law  and  to  grant  security  over  its  assets  for  the 

purposes  of  performing  its  obligations  under  such  guarantee.  Any  necessary  detail  for  the 

implementation of such paragraph may be laid down by a decision of the Minister for Finance   

5.2  The ECB notes that the abovementioned Article 1(6) would extend the mandate and scope of action 

of  the  HFSF  by  turning  it  into  a  potential  guarantor  of  credit  institutions’  exposures,  thereby 

strengthening their financial state. This provision does not set out the conditions for providing such 

guarantees and the rationale behind it. The explanatory memorandum also makes no reference to 

the  conditions  to  be  met  for  the  activation  of  such  guarantees  and  their  assessment,  as  well  as 
regarding  the  implications  and  the  underlying  reasoning19.  Moreover,  the  fact  that    Article  1(6) 

provides for a  ministerial  decision to regulate ‘any necessary detail for the implementation’ does 

not  provide  the  necessary  clarity  and  legal  certainty,  as  the  decision  would  only  address  the 

implementation  of  the  provision  and  not  the  conditions  for  the  activation  of  the  guarantees. 

Furthermore, the explicit objective of the HFSF is to maintain the stability of the Greek banking 
system by strengthening the capital adequacy of credit institutions20. This can only be convincingly 

achieved  by  providing  Greek  credit  institutions  with  a  solid,  fully  loss-absorbing  capital  base, 

which gives a clear signal to the market that the Greek banking sector is healthy and viable. The 

19  
20  

It merely states that the objective would be to ‘to boost confidence in the Greek financial system’. 
See Article 2 of the Law on the HFSF. 

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possibility  to  guarantee  the  exposures  of  the  credit  institutions  instead  of  recapitalising  them 

directly does not seem to be transparent and convincing in achieving this objective of the HFSF.  

6. 

Income tax and related issues 

6.1  Article  3,  submitted  as  a  distinct  set  of  the  original  draft  provisions,  stipulates  that  the  debit 
difference  to  be  borne  by  credit  institutions  participating  in  the  Greek  debt  exchange21  will  be 

deducted from the gross income in thirty equal-amount annual instalments, starting from the year in 

which  the  exchange  took  place.  Furthermore,  it  stipulates  that  where  (i)  the  annual  tax  profits  of 

such credit institutions (before deduction of the annual debit difference and after setting off against 

tax losses of previous years carried over) do not suffice to write down the annual debit difference, 

or  (ii)  annual  tax  losses  occur,  the  income  tax  corresponding  to  the  part  of  such  annual  debit 

difference not written down will, to the extent not covered by annual profits, automatically amount 

to  a  final  and  cleared  claim  of  the  beneficiary  credit  institution  against  the  State;  such  claim  is 

generated at the time when the beneficiary submits its income tax return and is set off against its 

income tax of the subsequent years until it is repaid in full. At the same time, the abovementioned 

Article  3  provides  that  the  claim  is  subject  to  a  prescription  period  of  thirty  years  from  its 

generation.  

6.2  The  ECB  notes  that  this  particular  provision,  while  submitted  as  part  of  the  original  draft 

provisions, adopted on 19 April 2012, has thus far  not been adopted by the Greek authorities. In 

terms of its substance and purported objectives, the ECB is of the view that there is need for further 

clarification of such provision and its individual elements by the national legislator. In particular, 

the provision in its current form is not clear as to whether the claim of the credit institution against 

the  State  will  depend  on  the  credit  institution’s  future  profitability  or  not.  In  this  respect,  the 

explanatory memorandum states that the tax benefit for credit institutions participating in the Greek 

debt restructuring will not depend on their future profitability; accordingly, the provision refers to a 

final and cleared claim of the beneficiary credit institution against the State. However, it is not clear 

how this interacts with the provisions stipulating that the claim will be set off against the income 

tax  of  the  subsequent  years,  that  the  debit  difference  to  be  borne  by  credit  institutions  will  be 

deducted from the gross income in thirty equal-amount annual instalments and, most importantly, 

that  the  claim  will  be  subject  to  a  30-year  prescription  period.  In  relation  to  the  above,  the  ECB 

notes that in the event that a given credit institution is not profitable for a number of years, the fact 

that  such  tax  credit  may  result  in  lower  capital  needs  –  to  fulfil  the  regulatory  requirements 
following participation in the Greek debt restructuring22– may be an issue from a financial stability 

21  

22  

According  to  such  Article  3,  the  debit  difference  is  defined  as  the  difference  between  the  acquisition  cost  for  the 
exchanged  Greek  Treasury  bonds  and  corporate  bonds  guaranteed  by  the  Greek  State  and  the  face  value  of  the  bonds 
given in exchange, provided that the legal entity has not already set off the relevant devaluation loss, nor will it do so in 
the future.  
Private sector involvement in the Greek debt restructuring was agreed by the Heads of State or Government of the euro 
area Member States. See Euro Summit Statement, Brussels, 26 October 2011, available on the website of the Council of 
the European Union at www.consilium.europa.eu.   

8 

  
                                                 
ECB-PUBLIC 

perspective. The ECB would require clarification of the above in order to be able to meaningfully 

assess such an arrangement in the context of a consultation procedure.  

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

Done at Frankfurt am Main, 22 May 2012. 

[signed] 

The President of the ECB 

Mario DRAGHI 

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