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Inception date: 30 Jul 2010 | Removal date: 29 Jul 2012

Capital injection and equity stakes (including bailouts)

On 21 July 2010, Greece notified to the Commission a request for approval of recapitalization operations under the Financial Stability Fund. The Memorandum of Understanding on Specific Economic Policy Conditionality between the Greek Government, the European Union, the International Monetary Fund and the European Central Bank from 3 May 2010 provides for the establishment of a Financial Stability Fund. The objective of this Fund is to safeguard the stability of the Greek banking system by providing equity capital to credit institutions. The Fund provides a safety net for credit institutions that may not be able to continue to comply with the capital requirements. The beneficiaries of the Fund are all credit institutions, including subsidiaries of credit institutions having their registered office abroad, legally operating in Greece following authorization by the Bank of Greece.

The capital of the Fund amounts to EUR 10 billion from the EU-IMF financial support mechanism to Greece. The Fund's capital shall be gradually paid up by the Greek State. The Fund is set up for a limited duration until 30 June 2017.

The measure islimited in time. The Greek authorities request theapproval of the recapitalisations under the Fund until 31 December 2010. If the Greek authorities intend to prolong the measure after thisperiod, they will have to notify this to the Commission which willassess at that stage the terms and conditions for the prolongation.

The Greek authorities have notified the measure as compatible State aid within the meaning of Article 107(3)(b) of the Treaty on the Functioning of the European Union (TFEU).

The European Commission found that the measure constitutes State aid and gave the following assessment:
"The measure distorts competition as it strengthens the position of beneficiaries by providing them with the financial resources to continue to comply with the capital requirements. As the beneficiaries are active in other European financial markets and as financial institutions from other Member States operate in Greece, the recapitalisations under the Fund are also likely to affect trade between Member States." (par. 48 of the letter from the EC to Greece- Brussels, 3.9.2010 C(2010) 6077 final).

Commission found that the measure satisfies the conditions for aid under Article 107(3)(b) TFEU, and therefore it is compatible with the internal market.
First, Second and Third Prolongation of the Recapitalisation of credit institutions in Greece under the Financial Stability Fund - State aid SA.31999 (N/2010), SA.33154 (N/2011) and SA.34148 (N/2011)

According to the original measure, the Greek authorities could request theapproval of the recapitalisations under the Fund until 31 December 2010. Any extension shall be notified to the EC (see above).
On21 December 2011, the Greek authorities notified an third extension of the measure until 30 June 2012 after having previously notfied two other extensions that have been approved by the EC respectively on14 December 2010 and27 June 2011.
The Commission decided that the measure remains compatible with the internal market until 30 June 2012.

A state measure in the GTA database is assessed solely in terms of the extent to which its implementation affects the extent of discrimination against foreign commercial interests. On this metric, the state aid proposed here is discriminatory.



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