Greece’s Piraeus Bank SA, the biggest lender to companies and households, won approval from the European Union for 2.72 billion euros ($2.88 billion) in state aid on the basis of an amended restructuring plan.
“The European Commission concluded that the measures already implemented as part of the bank’s existing restructuring plan of July 2014, in addition to those envisaged in the amended plan, will enable Piraeus Bank to ensure lending to the Greek economy in line with EU state-aid rules,” EU said in a statement on Sunday.
After the European Central Bank’s Single Supervisory Mechanism identified a capital shortfall of 4.93 billion euros for Piraeus Bank, the bank has succeeded in covering in 1.94 billion euros of the capital needs by private means, the EU said. The SSM also approved additional capital actions of 271 million euros.
“This means that Piraeus Bank has raised sufficient capital from private investors to cover its asset-quality review and baseline scenario capital needs under the SSM’s comprehensive assessment,” the EU said. “The level of private capital is a sign of market confidence in the restoration of the long-term viability of this bank.”
The funding will be provided by the European Stability Mechanism in the framework of Greece’s adjustment program, the EU said. The ESM’s board of directors is expected to decide on the disbursement on Tuesday, according to a Twitter posting on Sunday.
The EU described the bank as Greece's largest lender to businesses and households.
“I welcome that Piraeus Bank has covered a significant part of its capital needs from private investors,” EU Competition Commissioner Margrethe Vestager said in the statement. “This is a sign of market confidence.”