Finland’s government must reveal the details on a collateral agreement it made with Greece in exchange for providing funds for a second rescue loan, the Nordic nation’s top administrative court said.
The Finance Ministry must make the agreement public with the exception of names and other identifiers of the Greek banks that facilitated the asset swap, the Supreme Administrative Court in Helsinki said today in a ruling posted on its website.
Finance Minister Jutta Urpilainen and Greece’s then-Finance Minister Evangelos Venizelos signed the deal on Feb. 20, 2012, after reaching an agreement acceptable to other euro-area members on Oct. 5, 2011. Urpilainen demanded collateral in exchange for backing the bailout, based on an election promise to protect taxpayers.
Finland was the only country to take the collateral deal that was made available to all euro members. The Finance Ministry had showed the document to lawmakers without allowing them to make copies and then published a brief summary. Greece wanted the document to remain confidential, according to the court statement.
“This clarifies the situation and the interpretation of the law,” Urpilainen said in an e-mailed statement before her ministry later published the agreement.
Under the accord, a total of about 880 million euros ($1.14 billion) of Greek bonds are transferred from Greek banks to a trustee, which sells them and invests the proceeds in bonds of the five highest-rated euro-area sovereigns with maturities of 15 to 30 years.
The court intervened to make the deal public after seven complaints were filed, including from two lawmakers, a researcher and several news reporters.
“It’s great that secrecy didn’t prevail,” Pirkko Ruohonen-Lerner, a lawmaker of the opposition “The Finns” party and one of the complainants, said in a statement. “The ruling is a significant victory for good and transparent governance needed in a democratic state.”
In exchange for the special treatment, Finland paid up- front its contribution to the permanent rescue fund’s capital and agreed to forgo a share of profits from loans granted by the European Financial Stability Facility. Collateral wouldn’t cover its entire Greek exposure. In the event of default, it couldn’t cash in on the collateral until Greece’s official loans mature, a wait that might last 30 years.
The Nordic country’s share of the second Greek rescue was about 2.2 billion euros and it gave Greece a 1.3 billion-euro bilateral loan in the first bailout, according to the Finance Ministry.
Finland also agreed on collateral in exchange for guaranteeing bailout loans for Spanish banks last year. That agreement was public because it was signed with the Spanish Deposit Guarantee Fund of Credit Institutions that doesn’t have trade secrets to protect, Urpilainen said in a speech in parliament on July 19.