The European Commission has approved €2.72bn in state aid for Greece’s Piraeus Bank, following a capital assessment by the European Central Bank's Single Supervisory Mechanism (SSM).
The assessment has shown that Piraeus Bank needed extra capital of around €4.93bn. Of that, the bank raised €1.94bn from private investors and SSM approved €271m in additional capital actions.
The remaining €2.72bn will be covered by additional state aid injected by Greek special purpose vehicle Hellenic Financial Stability Fund (HFSF).
The government’s financial assistance, approved on the basis of the bank’s amended restructuring plan, is in line with EU state aid rules, the Commission said.
The Commission said in a statement: "Under EU state aid rules, additional capital requirements should primarily 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 has to be approved under EU state aid rules before it is granted, and on the basis of a restructuring plan."
The Greek authorities have proposed certain changes to Piraeus Bank’s restructuring plan that was approved in July 2014.
These changes include deepening of the bank’s operational restructuring and some amendments of deadlines in response to the changes in the bank’s macroeconomic situation, as well as a commitment to further dispose of non-core assets outside of Greece.
EU Commissioner in charge of competition policy Margrethe Vestager said: "The additional public support and further implementation of its restructuring plan should enable the bank to return to long-term viability and continue supporting the recovery of the Greek economy."
Piraeus Bank operates in Greece, Frankfurt and London through a network of 778 branches.
Image: Piraeus Bank headquarters in Athens, Greece. Photo: courtesy of Wikimedia Commons.