Opinion of the European Central Bank of 20 February 2013 on the profit distribution of the Bank of Greece (CON/2013/15)
Date: 2013-02-20
Institutions: European Central Bank
Subjects: Greece, central bank, investment income, national law, profit, securities

EN 

ECB-PUBLIC 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 20 February 2013 

on the profit distribution of the Bank of Greece 

(CON/2013/15) 

Introduction and legal basis 

On 31 January 2013, the European Central Bank (ECB) received a request from the Bank of Greece for 

an  opinion  on  draft  legislative  provisions  amending  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 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 provisions relate to the Bank of Greece. 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 amend Article 71(3) of the Statute of the Bank of Greece on the appropriation of its 
profits2. In particular, the proposed amendment expressly enables the Bank of Greece to transfer to the 

Greek State its income accruing from its Securities Market Programme (SMP) portfolio. 

2. 

General observations 

The ECB notes that the proposed amendment to the Statute of the Bank of Greece has to be seen in the 
context of the Eurogroup statement on Greece of 27 November 20123. According to this statement, the 

euro area Member States would be prepared to consider initiatives, including a ‘commitment by Member 

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2  

3  

OJ L 189, 3.7.1998, p. 42. 
Article  71  of  the  Statute  of  the  Bank  of  Greece  was  last  amended  by  Article  165(7)(i)  of  Law  4099/2012  (FEK 
250/20.12.2012)  ratifying  the  decision  of  the  79th  Annual  General  Meeting  of  Shareholders  of  the  Bank  of  Greece  of 
24 April  2012.  A  new  paragraph  3  was  added  to  Article  71,  expressly  enabling  the  Bank  of  Greece  to  transfer  to  the 
Greek State for the financial years 2012-2020 its income from bonds it held in its investment portfolio on 31 December 
2011. The ECB issued Opinion CON/2012/31 on the relevant draft provisions. All ECB Opinions are published on the 
ECB’s website at www.ecb.europa.eu.  
Available on the Council’s website at www.consilium.europa.eu.  

 
 
 
 
 
                                                 
ECB-PUBLIC 

States  to  pass  on  to  Greece’s  segregated  account,  an  amount  equivalent  to  the  income  on  the  SMP 

portfolio accruing to their national central bank as from budget year 2013’.  

3. 

Transfer of Bank of Greece’s SMP income to the Greek State 

3.1   Article  71(3)  of  the  Statute  of  the  Bank  of  Greece  currently  provides  that  exceptionally  for  the 

fiscal  years  2012  to  2020,  and  following  a  decision  of  its  General  Council  implementing  an 

international agreement, the Bank of Greece’s income resulting from Greek government bonds held 

in its investment portfolio on 31 December 2011 may be transferred to the Greek State. It further 

specifies that the transfer of such income will take place after the payment of the 12% dividend on 

the capital, provided that the regular reserve fund has been funded up to the amount of the capital 

of the Bank of Greece and that the income transferred does not exceed the remaining amount of net 

profits.  While  the  draft  provisions  are  intended  to  supplement  Article  71(3),  the  ECB  notes  that 

their  interaction  with  the  other  provisions  of  Article  71  on  the  appropriation  of  the  Bank  of 

Greece’s profits must ensure a robust framework for the profit distribution by the Bank of Greece, 

as outlined below.  

3.2  The  transfer  of  the  Bank  of  Greece’s  investment  portfolio  income  currently  provided  for  in 

Article 71(3),  as  well  as  of  the  SMP  income  under  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  a  national  central  bank  (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 Bank of Greece’s income from Greek government bonds as well as from the SMP 

portfolio 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 income4. The draft provisions may create 

the impression that it is not the ‘profits’ but ‘income’ stemming from these bonds that is the subject 

of the transfer. An amendment to the draft provisions would thus be warranted, to reflect the above 

profit  distribution  principle.  This  would  ensure  clarity  and  be  consistent  with  the  scope  of 

application  of  Article  71,  which  is  the  sole  Article  of  Section  XIII  entitled  ‘Appropriation  of 

profits’. 

3.3  

In addition, the distribution of profits must comply with the principle of financial independence5. 

Profits  may  be  distributed  to  the  State  budget  only  after  any  accumulated  losses  from  previous 

years have been covered and financial provisions deemed necessary to safeguard the real value of 
the NCB’s capital and assets have been created6. The ECB understands that the financial provisions 

specified in the first sentence of Article 71(1) will always be constituted prior to the distribution of 

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5  
6  

See also paragraph 3.1.1 of Opinion CON/2012/31.  
See also paragraph 3.1.2 of Opinion CON/2012/31. 
See also page 27 of ECB’s Convergence Report 2012. 

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ECB-PUBLIC 

any profits, including where the exceptional distribution rules of Article 71(3) apply. In relation to 

accumulated  losses  from  previous  years,  the  ECB  notes  that  currently  Article  71(1)  does  not 

explicitly  provide  that  such  losses  may  be  covered  prior  to  the  profit  distribution.  The  ECB 

understands  that  the  relevant  principles  on  profit  distribution  enshrined  in  Greek  company  law 

apply in this respect and that, according to such principles, accumulated losses from previous years 
are  covered  before  profit  distribution7.  However,  in  line  with  the  requirements  for  financial 

independence,  as  described  above,  and  considering  that  other  deductible  items  are  explicitly 

referred to in Article 71(1), the consulting authority could consider amending the profit distribution 

rules specified in the Statute of the Bank of Greece in order to explicitly provide that profits may be 

distributed to the State budget not only after the above financial provisions have been created but 

also after any such accumulated losses from previous years have been covered.  

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

Done at Frankfurt am Main, 20 February 2013. 

[signed] 

The Vice-President of the ECB 

Vítor CONSTÂNCIO 

7  

See  codified  Law  2190/1920  on  sociétés  anonymes  in  particular  Articles  44a  et  seq.  According  to  Article  72  of  the 
Statute of the Bank of Greece, the provisions of the laws on sociétés anonymes and banks apply to the Bank of Greece, 
unless they conflict with its Statute. 

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