Greece’s T Bank SA received temporary approval from the European Union for about 680 million euros ($866 million) in government funding to aid the bank’s takeover by the state-owned TT Hellenic Postbank SA.
The European Commission said it would prolong its approval for the subsidy if Greek authorities submit an updated restructuring plan for Hellenic Postbank within six months that takes account of the new aid for T Bank.
The Bank of Greece put T Bank’s deposits, personnel, and banking activities under Hellenic Postbank’s control in December because T Bank wasn’t able to raise enough capital to keep operating. About 2.16 billion euros of T Bank’s liabilities and around 1.48 billion of its assets were transferred to Hellenic Postbank. The shortfall of 680 million euros was covered by resolution funds from Greece’s deposit and guarantee fund.
“When a small bank is in difficulty, selling its good assets and liabilities to a larger bank is often an appropriate solution,” said EU Competition Commissioner Joaquin Almunia in an e-mailed statement. “The commission made sure that the aid granted in that context was restricted to the minimum necessary to compensate the buyer for the lower value of the assets transferred as compared to the transferred liabilities.”
T-Bank and Bank of Greece referred requests for comment to Hellenic Postbank, which declined to speak about the EU decision.
Hellenic Postbank, Greece’s sixth-biggest lender, received some 225 million euros from the Greek government’s recapitalization program in 2009 as well as state guarantees, the EU said.
The Athens-based bank last month said it would release 2011 financial results by May 31. It posted a 543.7 million-euro net loss in the first nine months of 2011.