The Hellenic Financial Stability Fund (HFSF), Greece’s bank bailout fund, has spent 38 billion euros ($51.69 billion) propping up the country’s ailing bank system, three-quarters of the total it was endowed with.
About 25 billion euros were used to bolster the capital of Greece’s four biggest banks, an HFSF report said. The HFSF, set up in July 2010, spent another 13 billion to wind down eight small lenders as part of measures to shrink the country’s banking sector.
Greece’s debt crisis depleted the capital of its banks. A crippling recession turned sour a large part of their loans and a debt cut agreed last year to ease Athens’s debt load slashed the value of the sovereign bonds they were holding.
Eurozone taxpayers and the International Monetary Fund, which bankroll the HFSF, have provided the bulk of the funds used to keep Greek banks going, the report showed.
Private investors contributed just 3 billion euros to the rescue of the three biggest lenders, National Bank, Piraeus Bank and Alpha Bank.
Banks have been separately raising funds by cutting costs and selling foreign units.
The HFSF is endowed with 50 billion euros out of the 240 billion euros the EU/IF have made available to rescue Greece from a chaotic bankruptcy that could have spread across the entire eurozone.
The rescue of Greece’s banking system has been largely completed now. But lenders might need yet more capital to cope with bad loans.
About a quarter of their loans are non-performing and that share might increase as the country’s six-year recession, which has wiped out a quarter of the economy, shows little sign of abating.
Stress tests will be carried out later this year to establish whether Greek banks have more capital needs. [Reuters]