Hellenic Financial Stability Fund: A Key to Greece's Economic Recovery

The Hellenic Financial Stability Fund (HFSF) was established in 2011 to provide emergency funding to Greek banks and stabilize the country's financial system.

In 2015, the HFSF recapitalized four major banks, injecting €10 billion into the banking sector.

The HFSF's efforts helped to restore confidence in the Greek banking system, allowing it to regain access to international capital markets.

The recapitalization was a crucial step in Greece's economic recovery, enabling the country to meet its international bailout commitments and avoid a catastrophic default.

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The Hellenic Financial Stability Fund (HFSF) was founded in July 2010 in Athens as a state-owned private legal entity.

Its purpose was to contribute to the stability of the Greek banking system for the sake of public interest.

The fund began its operation on September 30, 2010, with the appointment of its Board of Directors.

The European Financial Stability Facility (EFSF) seeded the fund with a significant 50 billion euros to recapitalize Greece's banks.

This investment helped establish the HFSF as a crucial player in maintaining financial stability in Greece.

By early 2015, the HFSF had a remaining buffer of 11 billion euros in EFSF bonds that the outgoing government had intended to repurpose as a precautionary credit line.

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The Hellenic Financial Stability Fund (HFSF) has undergone significant changes in its management structure over the years. On 30 January 2013, the fund's management was reorganized into a two-tier structure consisting of the General Council and the Executive Board.

Anastasia Sakellariou was appointed Managing Director, or CEO, as part of the Executive Board in 2013. However, Paul Koster resigned as Chairman of the General Council just a few months later, on 15 March 2013.

Christos Sclavounis replaced Koster as Chairman of the General Council, but he resigned in 2015, shortly after the SYRIZA government came into power. Panagiotis Roumeliotis was expected to take over as Chairman, but Sakellariou remained Managing Director.

Sakellariou was asked to step down from her position as Managing Director in May 2015 due to charges of breach of trust related to restructuring loans issued by the state lender.

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The Hellenic Financial Stability Fund (HFSF) has been actively involved in privatizing Greek banks. In Fall 2023, it started selling its stakes in Greek lenders to reprivatize the banks.

By March 2024, the HFSF had recouped €34.8 billion out of €30.9 billion injected into the banking system. This is a significant achievement, considering the challenges Greece faced during the financial crisis.

In November 2023, the HFSF reduced its stake in National Bank of Greece (NBG) from 40.39% to 20.39%. The HFSF also sold its entire stake of Alpha Bank (a 9% share) to UniCredit in the same month.

The HFSF sold a 10% stake in NBG in October 2024. The remaining 8.4% stake in National Bank will be transferred to Greece’s sovereign wealth fund at the end of the year.

The sale of a 12% stake in the HFSF to NBG is set to start next week, according to sources. This transaction marks the completion of the privatization of Greek banks that were bailed out during the financial crisis.

The 12% stake in the HFSF will be valued at approximately €900 million, based on the current market price of National Bank shares. The shares will be offered at a slight discount to the current market price.

The HFSF sold its entire 27 percent stake in Piraeus Bank in March 2024, fully privatizing the bank and raising 1.35 billion euros.

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The European Stability Mechanism (ESM) and European Financial Stability Facility (EFSF) have given their consent to the merger of the Hellenic Financial Stability Fund (HFSF) with the Hellenic Corporation of Assets and Participations (HCAP).

This decision was made in response to the Greek government's request on November 5, 2024, which required the prior consent of both institutions for any transfer or assignment of HFSF's rights or obligations under the relevant loan agreements.

The merger plan also includes the merger of the Hellenic Republic Asset Development Fund (HRADF) with HCAP, which does not require consent by the ESM or EFSF.

Before the merger becomes effective under Greek law, the ESM, EFSF, and HCAP will sign an implementation agreement to clarify the operational aspects of the transfer of HFSF rights and obligations to HCAP.

The planned merger of HFSF with HCAP will strengthen HCAP's operational capacity and allow it to manage state assets more efficiently.

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HFSF was established in July 2010 to maintain the stability of the Greek banking sector and has since recapitalised several systemic Greek banks using loans provided by the EFSF and ESM.

HCAP, a Greek state-owned holding company, was established in 2016 and operates independently for the public interest, managing Greek state assets to enhance their value and contribute to the country's economic development and debt reduction.

The merger will be beneficial for Greece's economy, aligning with the ESM's and EFSF's strategy to support Greece's efforts in enhancing long-term economic growth.

HFSF has effectively completed its main purpose and role after this year's partial divestment and monetisation in National Bank of Greece.

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