Gov?t green-lights bond transfer from HFSF to lenders

The Cabinet approved on Wednesday the legal framework for the transfer of bonds from the Hellenic Financial Stability Facility (HFSF) to commercial lenders in the context of the recapitalization process.

The decision provides for the HFSF to sign subscription agreements with the European Financial Stability Facility — that will fund the process — whereby bonds amounting to 18 billion euros will be transferred to the four major commercial banks: National, Alpha, Eurobank EFG and Piraeus.

The bonds will be deposited in a special account with the Bank of Greece and will be distributed to each lender to boost their Tier 1 capital. This is a temporary solution aimed at bolstering the capital base of the lenders until the final structure of the recapitalization is determined, after the elections.

The HFSF is committed to participating in the share capital increase of the banks with the following amounts: 6.9 billion euros in National Bank, 4.3 billion in Eurobank, 1.9 billion in Alpha and 5 billion euros in Piraeus.

These funds derive from the first installment of 25 billion euros set aside for the recapitalization process, whose completion has now been put back from the end of September to end-December.