ESM Approves Transfer of 555 Million Euros from HFSF to Greek State

The European Stability Mechanism (ESM) on Tuesday approved the transfer of 555 million euros from the Hellenic Financial Stability Fund (HFSF) to the Greek State, sources said. These funds are from the dividend payments of the preferential shares that the banks received for the recapitalisation in 2008.

While the ESM has agreed to do so last week, on Saturday it blocked the transfer, claiming that the HFSF funds could not be used for any purpose other that what they were intended for. After long negotiations over the weekend and after the positive outcome of Monday’s Eurogroup, the ESM gave in.

A spokesperson for the European Financial Stability Fund (EFSF) noted that the EFSF had no involvement with the 555 million euros remaining in the HFSF that the Greek government was asking for, since they concerned state support for banks before 2010 when Greece received the first loans from the EFSF.

The EFSF spokesman said that funds transferred to Greece from the EFSF in the context of the bailout agreement to recapitalise Greek banks were placed in the HFSF but of the 48.2 billion euros sent, the Greek banks used 37.3 billion euros. The remainder were returned to the EFSF and the sums remaining in the HFSF were 856 million euros in cash derived from revenues generated by bank recapitalisation and reforms.