The Commission has also found the amended restructuring plans of Alpha Bank and Eurobank to be in line with EU state aid rules. It concluded that the measures already implemented as part of the two banks' existing restructuring plans, in addition to those envisaged in the amended plans, will enable Alpha Bank and Eurobank to return to viability in line with EU state aid rules.
EU Commissioner in charge of competition policy, Margrethe Vestager, said: "This is an important step in the right direction for the economic recovery of Greece. The fully private capital raising for both Alpha Bank and Eurobank is a clear signal of strengthened trust in the viability of the two banks and the Greek banking system."
On 31 October 2015, the comprehensive assessment carried out by the European Central Bank's Single Supervisory Mechanism (SSM) to ensure that the four systemic Greek banks are adequately capitalised identified a capital shortfall of €2.74 billion for Alpha Bank and €2.12 billion for Eurobank.
Alpha Bank and Eurobank have succeeded in fully covering their capital needs with capital from private investors (existing creditors, through voluntary exchange of their bonds for new shares, and new investors), without having to resort to capital injections by the State. The private capital raising was helped by the Hellenic Financial Stability Fund's (HFSF) backstop, i.e. its commitment to cover any capital needs not found from private investors or from existing bond holders. It is a clear sign of market confidence in the restoration of the long-term viability of these two banks. It also shows that contributions by junior and senior bondholders can significantly reduce and even completely avoid the need for injections of taxpayer money to support banks, whilst preserving financial stability.
On this basis, and in light of the extensive restructuring of Alpha Bank and Eurobank implemented already, the Greek authorities proposed only minor changes to the restructuring plans approved in June 2014 and April 2014, respectively. These changes include a deepening of the banks' operational restructuring and some amendments of deadlines in response to the changes in the economic situations of the banks. The Commission concluded that the backstop provided by the HFSF as well as the amended restructuring plans are in line with EU state aid rules.
The Commission approved restructuring plans for Eurobank and Alpha Bank in April and June 2014, respectively. Despite positive signs over the course of 2014, the events that led to the agreement of a European Stability Mechanism (ESM) support programme for Greece in August 2015 significantly changed the situation on the ground and projections on the basis of which the restructuring plans were approved. In October 2015, the European Central Bank's Single Supervisory Mechanism (SSM) carried out a comprehensive assessment of the four systemic Greek banks to ensure they are adequately capitalised.
The ESM support programme agreed for Greece includes funding which is earmarked to cover potential capital needs of the banking sector. However, under EU state aid rules, additional capital requirements should in the first place be covered from the market and/or other private sources. If this is not sufficient and a bank needs state aid in the form of a capital injection, such support then has to be approved under EU state aid rules before it is granted, and on the basis of a restructuring plan.
Please also see the Commission's Policy Brief "State aid to European banks: returning to viability" on the application of EU state aid rules in the banking sector.
The non-confidential version of this decision will be made available under the case number SA.43366 and SA.43363 in the State Aid Register on the competition website once any confidentiality issues have been resolved. New publications of state aid decisions on the internet and in the Official Journal are listed in the State Aid Weekly e-News.