Eurozone bailout funds turn into profit machines

The euro zone’s two bailout funds, often seen as bottomless pits for taxpayer funds, are actually making money, their nine-month financial statements showed on Wednesday.

The European Stability Mechanism (ESM) — the permanent bailout fund — reported a net profit of 185.7 million euros for the first nine months of the year against a 0.5 million loss in the last three months of 2012.

Most of the profit came from almost 182 million euros in interest on a 41.3 billion-euro loan to Spain and 4.5 billion euros disbursed to Cyprus in 2013.

Making a profit, however modest, may help the ESM win support in sceptical Germany as the euro zone debates giving it a wider remit to support banks.

The ESM is a fund owned by euro zone governments that has 70 billion euros of capital. Unlike commercial banks, its aim is not to make maximum profits but to lend cheaply to countries in difficulty.

The European Financial Stability Facility (EFSF) — the forerunner fund which financed the bailouts of Greece, Ireland and Portugal but will not take on new ones — made a profit of almost 74 million euros in the January-September period.

That is up 8.3 percent from the same period of 2012. Interest received on loans to Greece, Ireland and Portugal jumped 72 percent in nine months of 2013 compared with the same period of 2012. Interest paid on bonds the EFSF issued to raise money for the bailouts rose 57 percent.


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