The European Commission welcomed that capital to meet the shortfalls identified by the SSM’s comprehensive assessment for Alpha Bank and Eurobank has been fully raised from private investors. As a result, no state capital injections will be necessary.
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.