ESM and EFSF ,update

 

ESM and EFSF approve merger of HFSF with HCAP 28 November 2024 ESM Press Release no. 14/2024 The Boards of Directors of the European Stability Mechanism (ESM) and European Financial Stability Facility (EFSF) gave their consent today to the merger of the Hellenic Financial Stability Fund (HFSF) with the Hellenic Corporation of Assets and Participations (HCAP).  This follows the request of the Greek government of 5 November 2024, seeking approval for the merger by the ESM and EFSF, as the prior consent of both institutions is required for any transfer or assignment of HFSF's rights or obligations under the relevant loan agreements. The Greek government’s merger plan also includes the merger of 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. It will clarify the operational aspect of the transfer of HFSF rights and obligations under the loan agreements to HCAP and preserve the creditor status of ESM and EFSF so that it is unaffected by the resulting succession. “The planned merger of HFSF with HCAP will strengthen HCAP’s operational capacity, optimise its resources, and allow it to manage state assets more efficiently. Consequently, the consolidation will be beneficial for Greece’s economy and thus aligns with the ESM’s and EFSF’s strategy to support Greece's efforts in enhancing long-term economic growth,” said ESM Managing Director and EFSF CEO Pierre Gramegna. HFSF is a fund established in July 2010 to maintain the stability of the Greek banking sector. It has recapitalised several systemic Greek banks, using loans provided to the Greek government by the EFSF and ESM. It subsequently developed a strategy for the sale of its stakes in these banks. Following this year’s partial divestment and monetisation in National Bank of Greece, the HFSF has now effectively completed its main purpose and role. HCAP is a Greek state-owned holding company, which was established in 2016 and operates in an independent manner for the public interest. It manages Greek state assets, enhancing their value and contributing to the country’s economic development and debt reduction. ESM and EFSF waive Greece’s repayment obligation, enabling early repayment of GLF loans 28 November 2024 ESM Press Release no. 13/2024 The Boards of Directors of the European Stability Mechanism (ESM) and European Financial Stability Facility (EFSF) agreed today to waive the mandatory repayment obligation of ESM/EFSF loans in connection with an early repayment to Greek Loan Facility (GLF) lenders.  Under the ESM and EFSF loan agreements with Greece, upon early repayment to other creditors, a proportional amount of the financial assistance provided under ESM and EFSF facilities becomes immediately due and payable. Thanks to the waivers granted today by the ESM and EFSF, Greece will not be required to make an early repayment to either institution.    “Greece continues to make significant strides in its economic development. It is one of the fastest growing economies in the EU and has returned to investment grade. The planned early repayment of GLF loans is another positive signal for financial markets and demonstrates Greece's improving fiscal position. The repayment will generate some savings for the Greek budget and will also enhance its liquidity management. These are notable developments for the ESM and EFSF, who hold around 54% of Greece’s public debt. Our interests are aligned, and we will continue to support the Greek authorities in their efforts to enhance long-term growth and debt sustainability,” said ESM Managing Director and EFSF CEO Pierre Gramegna. The waivers were granted in response to a formal request from the Greek government, proposing an early repayment of principal payments originally due in 2026-2028 to GLF lenders in an amount of €7.935 billion. The Greek Loan Facility was part of the first financial support programme for Greece, agreed in May 2010. It consisted of bilateral loans from 14 euro area countries, amounting to €52.9 billion, of which €39.5 billion remains outstanding. Greece completed the repayment of its IMF loans two years ahead of schedule in 2022 and made a first early repayment of GLF loans in 2023.

About the ESM     The European Stability Mechanism (ESM) has the mandate to preserve financial stability in the euro area by providing financial assistance to Member States with severe financing problems. It is a permanent inter-governmental institution, operating since October 2012. The shareholders of the ESM are the 20 euro area Member States. All financial assistance to Member States is linked to appropriate conditionality. The ESM finances its assistance by issuing bonds and other debt instruments. It has a total subscribed capital of approximately €700 billion, which comprises €80 billion in paid-in capital and €624 billion in committed callable capital. The ESM’s maximum lending capacity is €500 billion.     About the EFSF     The European Financial Stability Facility (EFSF) was created as a temporary crisis resolution mechanism by the euro area Member States in June 2010. The EFSF has provided financial assistance to Ireland, Portugal and Greece. The assistance is financed by the EFSF through the issuance of bonds and other debt instruments. Since July 2013, the EFSF may no longer provide any further financial assistance.     European Financial Stability Facility Société Anonyme 6a Circuit de la Foire Internationale, L-1347, Grand Duchy of Luxembourg R.C.S. Luxembourg B153414