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It has also enabled the ESM Board of Directors to approve today the second disbursement under the first tranche of the ESM programme for an amount of €2 bn.
Regarding the recapitalisation of the significant Greek banks, we welcome the significant progress made over the past few weeks following the publication of the results of the ECB's Comprehensive Assessment. So far, all of the significant banks have been able to raise sufficient private capital to cover the AQR and baseline scenario, while two of them also for the adverse scenario of the Comprehensive Assessment. This contribution of private investors to the recapitalisation is in line with the requirements defined by the Eurogroup on 14 August. The EWG agreed, on the basis of a positive assessment of the European institutions, that the policy conditions, necessary to support the transfer of funds to the HFSF out of the €10 bn earmarked for bank recapitalisation and resolution purposes, have been met by the Greek authorities. The formal decision of the transfer of the funds to the HFSF will be taken by the ESM Board of Directors, as required, following the relevant state aid decisions on a case-by-case basis.
This recapitalisation exercise is being carried out in line with the Bank Recovery and Resolution Directive and the 14 August Eurogroup statement. The Eurogroup confirms that the precautionary recapitalisations are of a temporary nature and the proceeds stemming from the future disposal of the HFSF participations and other capital instruments in the Greek banks, acquired in the context of this recapitalisation exercise, will be used to repay the ESM as soon as such proceeds become available in line with the Eurogroup statement of 14 August.
Overall, the recapitalisation is an important step towards the restoration of the soundness of the Greek banking sector, thus safeguarding financial stability in Greece. This, however, requires further determined efforts by the Greek authorities to tackle the remaining vulnerabilities, notably those arising from the high level of NPLs. In this context, we welcome the intention of the Greek authorities for steadfast implementation of the NPL strategy in line with the timetable agreed with the European institutions. We also welcome their confirmation that the valuation of the commercial value of real estates, in the context of the Household Insolvency Law, will be carried out by independent auditors under the supervision of the Bank of Greece. [...]
Statement by the President of Eurogroup on Greece
On the basis of a final compliance notice from the institutions, the Eurogroup Working Group (EWG) agreed that the Greek authorities have now completed the first set of milestones and the financial sector measures that are essential for a successful recapitalisation process.
The agreement paves the way for the formal approval by the ESM Board of Directors on Monday 23 November for disbursing the €2 billion sub-tranche linked to the first set of milestones. Furthermore this, following the relevant state aid decisions, makes subsequent case-by-case decisions possible of the ESM Board of Directors on the transfer to the HFSF of the funds needed for the recapitalisation of the Greek banking sector out of the €10 billion earmarked for this purpose.