Opinion of the European Central Bank of 12 March 2013 on the recapitalisation of credit institutions (CON/2013/17)
Date: 2013-03-12
Institutions: European Central Bank
Subjects: Greece, capital increase, credit institution, financial stability, national law, right of pre-emption, shareholder

EN 

ECB-PUBLIC 

OPINION OF THE EUROPEAN CENTRAL BANK 

12 March 2013 

on the recapitalisation 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  opinion  on  draft  legislative  provisions  amending  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 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 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 law 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 provisions 

1.1  Pursuant to the explanatory 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 recapitalisation; (b) to broaden the scope for 

shortening initial and adjourned general meeting notice periods, to speed up the process of a bank’s 

recapitalisation;  and  (c)  to  eliminate  counter  motives  for  private  investors  to  participate  in  the 
recapitalisation of Greek banks. The draft provisions amend Law No 3864/20102 establishing the 

Hellenic Financial Stability Fund (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 rights, 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 

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OJ L 189, 3.7.1998, p. 42. 
FEK Α 138/9.8.2010. 

 
 
 
 
                                                 
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HFSF is supplemented to extend the shortened time limits currently in force3 to the convocation of 

general shareholders meetings 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  legal 

framework  for  the  recapitalisation  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 national legal framework, the ECB 
refers to its previous relevant opinions7. Without prejudice to this general observation, the ECB has the 

following specific observations. 

3. 

Reinstatement of the shareholders’ pre-emption rights 

The ECB attaches the utmost importance 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  efficient  and  effective  participation  of  private  investors  in  the 

recapitalisation of Greek banks. 

4. 

Timely completion of corporate proceedings for the recapitalisation  

4.1  The ECB stresses the importance of completing the issuance of common stock in a timely manner, 

thereby  ensuring  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  deciding  on  issues  related  to  the 

implementation of the Law on HFSF related to the recapitalisation process. 

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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. 
The draft law stipulates 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. 
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). 
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. 
See 
CON/2012/39.  

in  particular  Opinions  CON/2012/90,  CON/2010/54,  CON/2011/72,  CON/2012/014,  CON/2012/25  and 

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4.2  

In  previous  opinions8,  the  ECB  underlined  that  any  provision  permitting  the  shortening  of 

minimum  time  limits  required  by  law  for  the  convocation  of  general  meetings  of  shareholders 

should be considered by the consulting authorities having regard to both the Greek corporate law 

framework and to the relevant Union legislation. 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 Article 5 (Information prior to the 

general meeting) of Directive 2007/36/EC on the exercise of certain rights of shareholders in listed 
companies9. 

5.   Application of takeover bid provisions in the recapitalisation process 

5.1  Following recapitalisation by the HFSF, viable Greek banks will, pursuant 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 private 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 

recapitalising  Greek  banks.  Furthermore,  it  understands  that  the  shareholding  structure  of  Greek 

banks may 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  Directive  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  State  or  private  entities.  Although  the 

mandatory bid is designed primarily to protect the rights of minority shareholders, which is not the 

primary purpose of the draft provisions, the ECB considers it important that the Union regime for 

takeover bids is effectively applied to the recapitalised 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 

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10  

Opinion CON/2012/90, paragraph 6.1.  
Directive 2007/36/EC of the Εuropean 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). 
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. 

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account all relevant recapitalisation parameters, 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  governing  bodies  participates  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 recommendation 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  

12  
13  

A  draft  law  amending  the  Law  on  HFSF,  on  which  the  ECB  was  consulted  and  issued  its  Opinion  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.  
Opinion CON/2012/90, paragraph 8. 
Opinion CON/2012/14, paragraph 3.1. 

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