The new law on HFSF – What it provides

By Leonidas Stergiou

The disinvestment strategy of the participating banks until the end of 2025 is one of the main axes of the draft law on the operation of the Financial Stability Fund, which was submitted by the Minister of Finance, Mr. Christos Staikouras, for consultation until May 13. . The new law enters into force on June 1, according to the draft submitted.

This practically means that by the end of 2025, the HFSF should have zeroed its holdings by the National Bank (40.3%), Piraeus Bank (27.3%), Alpha Bank (9%), Eurobank (1 , 4%) and Attica Bank (62.93%). Already, Attica Bank’s capital increase to raise Ellington’s stake and private equity to the current HFSF rate has been delayed and is expected to launch after May. Also, market information states that the reduction of the HFSF percentage to 20% in the National Bank is being considered in the second half of the year, something that will depend on the market conditions and the reports of the independent consultants required by the new law. .

According to the draft law, the HFSF will be able to dispose of its shares in credit institutions in parts or in a lump sum, based on a strategic plan which will be prepared by a special advisor and approved by the Ministry of Finance. The distribution of the shares will be done through a book of offers, the offering price and the minimum coverage percentage will be determined by the HFSF Board of Directors, based on the valuation report of the offering consultant. At the same time, there is an obligation for an additional opinion / report of another independent financial advisor, with prestige and international experience in valuing credit institutions.

In case of sale of share packages by the Fund, the Minister of Finance receives the relevant reports and valuations and has the right of veto, if the proposed offering price is outside the range of these valuations. The sale of shares is not allowed to companies or organizations that may be directly or indirectly affiliated with the public.

The procedure is similar in case the Fund takes part in a capital increase of a credit institution. However, the capital increase should not be done for reasons of consolidation. The financing of the coverage and withdrawal of new shares or other property securities is done exclusively from the Fund’s cash or from the reinvestment of amounts that arose after a previous disposal of assets.

Veto and bankers’ salaries

The special rights, ie the right of veto in the decision-making by the Board of Directors of a bank where the Fund participates, are significantly limited, when the percentage of red loans falls below 10%. Below this limit, the ceiling for banks’ salaries is also released. Over 10%, continues the current limit which is the annual salary of the Governor of the Bank of Greece.

The same restriction, ie 10% on red loans, applies to the Fund’s veto power in dividend distribution decisions. On the other hand, the veto is maintained in cases where the representative of the Fund on the Board of Directors of the bank where he participates considers that a decision can significantly affect the participation of the HFSF in the share capital of the institution. The representative may request a postponement of the meeting for three working days or convene a board of directors.

* The whole plan for the exit of the state from the banks

Attached file: “Draft HFSF law”